RELIEF FROM SANCTIONS – UNIFIED
On 16 and 17 June 2014 the Court of Appeal heard three conjoined appeals on relief from sanctions issues and indicated that it would re-visit the Mitchell criteria. Judgment is awaited at the time of writing (early July 2014).
KERRY’S LAW BECOMES LAW
28 DAY EXTENSION APPROVED BY PARLIAMENT
The Civil Procedure (Amendment No 5) Rules 2014 in force 5 June 2014 – allow parties to extend time by consent without reference to, or permission of, the court. Although technically this does not statutorily repeal Mitchell v News Group Newspapers Limited[2013] EWCA Civ 1537 it does overturn many of the decisions purporting to follow Mitchell and represents a significant assertion by Parliament of its sovereignty over the courts in the Justice or Administration of Justice debate. Parliament favours Justice. One would have hoped that the courts did too.
The extension must be “by prior written agreement”, that is it must be an “in time” agreement made before the time for complying with a particular deadline has expired.
Consequently retrospective agreements are not allowed by the new rule.
The maximum extension allowed is 28 days.
The date and time of the extension must be made clear and it is best to put in the agreement that the step must be carried out
“On or before the [ ] day of [ ]”
rather than simply referring to a “21 day extension” or whatever.
This was an issue in the case of Thomas, considered below, where the parties had orally agreed an extension of one month and there was then a dispute as to whether the extension ran from the date of the conversation or the date of expiry of the period for serving the claim form.
The Court of Appeal said
“…it is always desirable that agreements between solicitors be reduced to writing and – given the ease of communication by email – these days, hardly a burden. Second, when agreements (or court orders) about the date by which a thing is to be done are made, it is always better to specify that date precisely rather than by reference to a period such as a week or a month. There is always room for misunderstandings or accidentally fixing a weekend or Bank Holiday if time periods are used.”
(Jackson LJ)
It must be a written agreement.
What constitutes a “written agreement” was considered by the Court of Appeal in the context of extending time for service of the claim form, where CPR 2.11 states that time limits can be varied by “the written agreement of the parties.”
In Thomas v Home Office [2006]EWCA Civ 1355
the Court of Appeal held that the fact that an oral agreement had been reached between the parties does not stop one party challenging the agreement on the basis that it is not in writing, that is the doctrine of estoppel cannot apply.
Here the parties agreed an extension of time for service of the claim form, but the District Judge struck out the claim on the basis that the parties could not extend time for service. The Court of Appeal held that the parties could extend time for service but that the agreement had to be in writing and here it was not and so the claim remained struck out.
Lord Justice Neuberger, then in the Court of Appeal and now President of the Supreme Court, set out what is required by CPR 2.11.
“22. It is accepted on behalf of the claimant that the requirements of r.2.11 that there be “a written agreement between the parties” means that there must be some written document. However, there was a sharp division between the parties as to what type of document or documents would satisfy that requirement.
23. Before deciding that point, it is, however, necessary to consider an anterior point made on behalf of the claimant, namely that once there has been one variation which is a “written agreement”, any subsequent variation will be valid even if made orally. This argument, as reformulated by Lloyd LJ in argument, is that r.2.11 is concerned with stipulating that a variation to the time limit in r.7.5 must be in writing, but that any subsequent variation, being a variation to the time limit agreed in the written variation, is not a variation of the time limit “specified by a rule”.
24. Ingenious though that argument is, it must be rejected, in my view. First, as a matter of principle, it seems to me little short of ridiculous to conclude that r.2.11 requires the first variation to be in a “written agreement”, but permits any further variation to be oral, or even to arise implicitly in some way. Secondly, ignoring r7.6 for the moment, it seems to me that where a claim form is served outside the time limit specified in r.7.5, the court could only hold that the claim form had been validly served if satisfied that there had been a variation (or series of variations) of the time limit, and such variation or variations would all have to satisfy r.2.11. Thirdly, as pointed out by Jacob LJ, the logic of the claimant’s argument in this connection is that, once there has been one written variation, there could be no further variations, because there would, on this argument, be no express right to vary the initial variation, and the natural effect of the rules I have been discussing is that the only variations (whether by the court or by the parties) to the time limits contained in r.7.5 are those permitted expressly in the CPR.
25. That brings me, then, to the question of what constitutes a “written agreement of the parties”. Clearly, it would encompass a single document signed by both parties. However, contrary to Mr Serr’s submissions, I see no grounds, either in principle or as a matter of language, for limiting it to a single document. I can see no reason why an exchange of letters between the two solicitors concerned, in which the extension of time is agreed, would not constitute a “written agreement”.
26. An oral agreement which is then confirmed in writing by both sides appears to me also to be within the concept of a “written agreement”. The oral agreement itself would not, of course, be capable of being a written agreement. However, it seems to me that where following the oral agreement, the two solicitors exchange letters confirming what they have agreed, the exchange of letters amounts to an agreement in writing that they have agreed (albeit orally) an extension of time: to my mind, it would, at best, be no more than a quibble to contend that an agreement in writhing that the parties have agreed something orally does not constitute a “written agreement of the parties”. If the oral agreement, because of the very fact that it was oral, could not validly effect a variation, then it seems to me that there is no reason why it cannot be said that the time limit has been “varied by the written agreement of the parties” even though that written agreement was an agreement between the parties that they had orally agreed the variation.
27. I think things get more difficult where the parties, having orally agreed a variation, each subsequently refer to what has been agreed in correspondence passing between them. An example, albeit of a slightly unusual nature, may be found in the facts of the present case. The claimant’s solicitors effectively confirmed the extension to the 1 April in their letter of 24 February 2005 (and if the defendant’s solicitor had replied in a letter confirming this extension, then there would, for the reasons I have just given, have been a written agreement in my view). However, what happened is that, almost four weeks later, the defendant’s solicitor wrote to the claimant’s solicitors in connection with a different matter, namely the expert evidence, and enclosed a letter to the expert in which the solicitor stated that an extension to 1 April 2005 had been agreed.
28. With some hesitation, I have reached the conclusion that this was simply insufficient to amount to a “written agreement” as contemplated by r.2.11. First, it seems to me to involve an impermissible stretching of the expression to cover the contents of a letter, whose purpose had nothing whatsoever to do with agreeing, but was merely communicating to a third party what had been orally agreed. Secondly, it appears to me undesirable that the question of whether or not there has been a valid agreement should turn on what a solicitor happens to write in subsequent correspondence which was not intended to bear on the question of agreement at all. To my mind, the concept of a “written agreement between the parties”, particularly in the context of the CPR, involves a document or exchange of documents which is intended to constitute the agreement or to confirm or record the agreement. Because one cannot envisage every possibility which might eventuate, I would not want this to be seen as being entirely prescriptive.
29. Having said that, it seems to me clear that an oral agreement between two solicitors, subsequently recorded in a letter sent by one solicitor to the other but not replied to by the other, cannot possibly be said to constitute a “written agreement of the parties”. Similarly, an oral agreement between two solicitors, evidenced by an internal confirmatory note by one solicitor, or even by each of the solicitors, cannot constitute a written agreement, unless, of course, the internal notes are exchanged (or, for instance, one solicitor sends its internal note to the other, and the other in some way confirms in writing its relevant contents).”
Text of relevant change:
“Amendments to the Civil Procedure Rules 1998
3. In rule 3.8 –
(a) in paragraph (3)(b) after “agreement between the parties” insert “except as provided in paragraph (4)”;
(b) in paragraph (3) insert-
“(4) In the circumstances referred to in paragraph (3) and unless the court orders otherwise, the time for doing the act in question may be extended by prior written agreement of the parties for up to a maximum of 28 days, provided always that any such extension does not put at risk any hearing date.”
Should you agree to an extension?
That still leaves open the question of whether parties should agree extensions or seek to put maximum pressure on their opponent in the hope of a technical knock-out. Is a solicitor who advises a client to agree an extension potentially liable in negligence for failing to seek that technical knock-out, that is a loss of a chance claim?
In Hallam Estates v Baker [2014] EWCA Civ 661, a judgment delivered shortly before the new rule came in to effect, Jackson LJ said:
“By way of digression I comment that rule 3.8 will shortly be amended so that in the ordinary way parties can, without reference to the court, agree extensions of time up to 28 days, provided that this does not put at risk any hearing date. A variety of circumstances may arise in which one or other party (however diligent) may require a modest extension of time. Under rule 1.3 the parties have a duty to help the court in furthering the overriding objective. The overriding objective includes allotting an appropriate share of the court’s resources to an individual case. Therefore legal representatives are not in breach of any duty to their client when they agree to a reasonable extension of time which neither imperils future hearing dates nor otherwise disrupts the conduct of the litigation. On the contrary, by avoiding the need for a contested application they are furthering the overriding objective and also saving costs for the benefit of their own client”.
In Lakatamia Shipping v Nobu Su [2014] EWHC 796 (Comm) the court awarded costs against a party opposing an application for relief from sanctions.
That is likely to become much more common.
GENERAL PRINCIPLES
The Mitchell case dominates discussions and has provoked fury amongst lawyers and is now simply being ignored by many judges in many courts who are in open rebellion in a manner unprecedented in recent times.
The Daily Telegraph, see my blog of 26 February 2014, refers to the consequences of the Mitchell approach as “Orwellian” causing “grave injustice” and which will “backfire horribly (as almost its predecessors have)”. “The Masters of the Queen’s Bench Division…are making it very clear already that they don’t go along with the Court of Appeal’s ruling that justice is no longer important. Several Circuit Judges and High Court Judges have also indicated disapproval of the new regime.”
Barrister Gordon Exall refers to “mayhem, madness and mess” following the Mitchelldecision and predicts that “the civil litigation system could break down in the not too distant future.”
“When the matter is reviewed in the fullness of time it is likely that it will be seen as a major setback to the principles of case management. It has allowed the rules to become an end in themselves”; and “One thing Mitchell may well have done effectively, is to doom the principle of co-operation to the dustbin.…How can parties co-operate when a technical argument could see one side relieved of all liability to pay?”
I am greatly indebted to Gordon Exall (http://civillitigationbrief.wordpress.com/author/gexall/) for much of the information in this piece. Gordon’s blog is essential reading for all litigators. You can also follow Gordon on Twitter @CivilLitTweet.
Gordon also points out that this has created a third way of resolving disputes; the two traditional methods are to settle or to let a judge decide at trial. Now there is a third option which is to litigate and hope that your opponent will be Mitchelled for a technical error.
Indeed if you have a hopeless case, but money to hire lawyers, it is pointless ever to settle. Rather fight on and hope for some Mitchelling. The High Court had something to say about this in Summit Navigation Ltd and others v Generalia Romania Asigurare and others [2014] EWHC 398 (Comm) – see below.
Receiving far less attention is a very different decision of the Court of Appeal, but one which enjoys equal status to Mitchell, and that is Abercrombie and Others v Aga Rangemaster Ltd (2013) EWCA Civ 1148
Many courts including the court of Appeal itself, are finding other Court of Appeal decisions allowing them to not follow Mitchell or are simply ignoring Mitchell, that is not even referring to it – see Nelson v Circle Thirty Three Housing Trust Ltd [2014] EWCA 106 below, where the Court of Appeal consisted of Lord Justice Rimer, Lord Justice McFarlane and Sir Robin Jacob, none of whom is one of the self-appointed Jackson 5 judges selected to preside over Jackson courts and Jackson matters.
There is now persuasive evidence that the Supreme Court is unhappy with the decision in Mitchell.
Is the Supreme Court anti Mitchell-Jackson?
In Real Time Systems Limited v Renraw and Others[2014] UKPC 6 3 March 2014
the Judicial Committee of the Privy Council was hearing an appeal from the Court of Appeal of Trinidad and Tobago in relation to relief from sanctions based on Civil Procedure Rules almost identical to those in England and Wales.
The Privy Council is the highest appellate court in the British Commonwealth. Many Commonwealth countries still have it as the highest court but most no longer allow appeals to the Privy Council. The significance of the Privy Council is that it is made up of Supreme Court Judges, albeit only three – Lords Mance, Clarke and Sumption – sat on this appeal.
Thus the Privy Council hearing a relief from sanctions appeal on virtually identical wording would know that every word would be scrutinised.
The Civil Procedure Rules of Trinidad and Tobago have an “overriding objective” including “to enable the court to deal with cases justly” (CPR 1.1(1)).
There is a duty actively to manage cases; there is a power for the court to take steps or give directions to manage the case and further the overriding objective; there is a power to strike out a statement of case.
Failure to comply leads to a sanction automatically taking effect; a party can apply for relief from sanctions; the court holds Case Management Conferences.
The Privy Council upheld the decision of the Court of Appeal of Trinidad and Tobago to grant relief from sanctions. Here are some key quotes:
“It does not follow from rule 35.3 that, if the pleadings are not satisfactory prior to exchange of witness statements, there is nothing that can be done about it. That would be a very strange conclusion, particularly under a new system of rules designed to enable matters to proceed smoothly and efficiently.” (My italics).
“There is no reason why the court, faced with an application to strike out, should not conclude that the justice of the particular case (my italics) militates against this nuclear option, and that the appropriate course is to order the claimant to supply further details, or to serve an amended statement of case including such details, within a further specified period.”
“…it would again be very strange if, by choosing only to apply for the more radical than the more moderate remedy, a defendant could force the court’s hand, and deprive it of the option to arrive at a more proportionate solution.”
In Dunhill v Tasker [2014] UKSC 18
the Supreme Court held that a compromise reached by a protected party cannot be valid unless approved by the court.
Here an action had been compromised at trial at a time when the claimant lacked capacity, although this fact was not known to her lawyers.
The Supreme Court held that the original action could not be compromised and that that original action should continue, even though it was many years old.
“She should have had a litigation friend from the outset and any settlement should have been approved by the court under CPR 21.10(1). We have not been invited to cure these defects nor would it be just to do so. The consent order must be set aside and the case go for trial”. (Paragraph 34).
This answered the question that the court had asked itself:
“Can matters be re-opened long after the event or does the normal rule of English law apply, which is that a contract made by a person who lacks capacity is valid unless the other party to the contract knew or ought to have known that she lacked that capacity in which case it is voidable (the rule in Imperial Loan Co Ltd v Stone [1892] 1 QB 599?”
The Supreme Court said:
“2. These issues are of very considerable importance, particularly in personal injury cases. On the one hand, there is the need to protect people who lack capacity from making settlements which are disadvantageous to them. On the other hand, people are assumed to have capacity to make their own decisions and should only be deprived of the right to do so in clear cases. There is also a public interest in upholding bargains which everyone, but particularly the other party, thought were valid when they were made and in putting an end to litigation. The spectre looms of many personal injury claims which insurers thought had been settled long ago being re-opened on the basis of an incapacity which they had no reason to suspect at the time. The real culprits, they would say, are the claimant’s original legal advisers (if she had any) against whom she will almost always have a claim for professional negligence”.
This decision has also attracted attention for its apparent pointed criticism of the Court of Appeal’s strict approach to procedural matters as embodied in Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537. Lady Hale, Deputy President of the Supreme Court said at paragraph 11
“As so often happens, the parties do not agree on precisely how the issues should be formulated and new arguments have been introduced to bolster the decisions reached in the courts below. But in this court we have to do our best to arrive at the right result and thus to allow all relevant arguments to be deployed before us unless this would be unfair to an opposing party” (My italics).
This is very different indeed, both in content and in tone, from the Court of Appeal’s “administration of justice before justice” and State before the individual line in Mitchell. Lord Dyson, Master of the Rolls, sat in both cases.
The decision is also an exhaustive and helpful analysis of the law in relation to protected parties, mental capacity, litigation friends and agency.
At Paragraph 27 the Supreme Court said:
“Neither the Rules of the Supreme Court, nor the CPR can change the substantive law unless expressly permitted to do so by statute: See In re Grosvenor Hotel Ltd (No 2) [1965] Ch 1210. Thus, it is argued, section 1 of the Civil Procedure Act 1997 gave the Civil Procedure Rule Committee power to make rules governing “the practice and procedure” to be followed in the civil courts and as further provided in Schedule 1 to the Act. Paragraph 4 of that Schedule provides that the Rules may modify the rules of evidence, thus showing that where it is intended that the Rules could modify the substantive law, express provision is made for this”.
Thus issues of vires arise.
Paragraph 30: “Para 1 of Schedule 1 to the Civil Procedure Act 1997 expressly provides that “Among the matters which Civil Procedure Rules may be made about are any matters which were governed by the former Rules of the Supreme Court or the former County Court Rules”. This could certainly be read as conferring on express power to make rules of court modifying the substantive law to the extent that the previous rules did so, whether or not those rules were within the powers which the previous rule-making bodies had been given”.
For reasons which are beyond me the decision in Mitchell – without doubt the most controversial Court of Appeal decision this century – has not been appealed.
It does not take a genius to work out from the above that an appeal would have had an excellent chance of success.
I analyse the cases below. Clearly you cannot afford to play the lottery with cases. Every letter of every order must be followed exactly and an application must be made as quickly as possible, and in any event before the time limit has expired, if you are in difficulty. Even then it is a matter of chance as to which Judge in which court you get, but Abercrombie and Nelson are the Court of Appeal cases to argue if you are making an application and Mitchell if you are resisting an application.
As an advocate it is your duty to place both before the court, although the Mitchell advocates do not always appear to be doing this.
Before analysing the cases in detail it is worth stressing that although Relief From Sanctions is the title of this piece, and the term generally used, the full force of Mitchell is being applied in relation to rules which have no specific sanction.
See for example
Webb Resolutions Limited v E-Surv Limited [2014] EWHC 49 (QB)
Here Mr Justice Turner applied the relief from sanctions test even though the relevant rule here – CPR 52.3(5) – did not provide for a specific sanction.
At paragraph 20 he said:
“…..strictly speaking, therefore, it may be concluded that CPR 3.9 relating to the grant of relief from sanctions ought not to apply. I am satisfied, however, that it is appropriate for the court to apply the same approach to such an application as falls to be examined in this case as did the Court of Appeal to the breach relating to costs budgeting in Mitchell”.
The judge made it clear that the default in this case – a delay of around three months beyond the permitted time for appeal – was so serious that he would have reached the same conclusion pre Jackson – Mitchell.
It is difficult to argue with that conclusion. The significance of this case is that the court applied the relief from sanctions test to a rule which does not contain a sanction.
I have no problem with the same principles being applied to rules whether or not they contain a specific sanction; very obviously all rules and court orders are there to be obeyed. It is the draconian approach and the extremity of the sanction which is worrying.
More particularly it is the offensive language by some of the judiciary
“……..the issue to be considered is not the interests of justice generally or even in relation to the parties but the interests of the administration of justice”. (Paragraph 56 of HMRC v McCarthy and Stone and another [PTA/345.2013]).
Everything in this piece must now be read subject to the dramatic developments on 13 February 2014, which I deal with below, but it is instructive to look at the recent history of CPR 3.9.
Relief from sanctions applications are governed by CPR 3.9 and from 1 April 2013 that rule reads:
“(1) On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need –
(a) for litigation to be conducted efficiently and at proportionate costs, and
(b) to enforce compliance with rules, practice directions and orders.”
This is achieved by way of The Civil Procedure (Amendment) Rules 2013 and sweeps away the old list of circumstances which the court had to consider, that is:
(a) the interests of the administration of justice;
(b) whether the application for relief has been made promptly;
(c) whether the failure to comply was intentional;
(d) whether there is a good explanation for the failure;
(e) the extent to which the party in default has complied with other rules, practice directions, court orders and any relevant pre-action protocol;
(f) whether the failure to comply was caused by the party or his legal representative;
(g) whether the trial date or the likely trial date can still be met if relief is granted;
(h) the effect which the failure to comply had on each party; and
(i) the effect which the granting of relief would have on each party.”
One unanswered question is how the current CPR 3.9 came into being. It is most certainly not what Lord Justice Jackson recommended in his Final Report. At page 397, at 6.7, he says:-
“Proposed rule change
I recommend that sub-paragraphs (a) to (i) of CPR 3.9 be repealed and replaced by:
“(a) the requirement that litigation should be conducted efficiently and at proportionate cost; and
(b) the interests of justice in the particular case.”
This form of words does not preclude the court taking into account all of the matters listed in the current paragraphs (a) to (i). However, it simplifies the rule and avoids the need for judges to embark upon a lengthy recitation of factors. It also signals the change of balance which I am advocating.”
Thus someone removed “the interests of justice in the particular case” as one of the two factors that the court has to consider, creating the situation where Mitchell courts are taking the view that the administration of justice is more important than justice itself. These courts seem unaware of the paradox that what they are in fact administering is not justice.
NEW CLINICAL NEGLIGENCE MODEL DIRECTION
The Clinical Negligence Model Direction used by Queen’s Bench Masters was changed on 13 February 2014 to incorporate the text of the new direction set out below.
This follows a hearing before Master Cook on 12 February 2014. This new direction has been approved by the President of the Queen’s Bench Division, Lord Justice Leveson and the Deputy-Head of Civil Justice Lord Justice Richards.
This is in an attempt to address, that is reduce, extensions of time applications.
The effect is that parties may now agree extensions of time of up to 28 days without the need to apply to Court. At present this only applies to clinical negligence actions in the Queen’s Bench Division.
Even for longer periods of extension, all the court requires in the first instance is an email including a brief explanation of the reasons, confirmation that it will not prejudice any hearing date and with a draft Consent Order in word format. The Court will then consider whether a formal Application and Hearing is necessary.
Master Cook indicated that it is hoped in time that the spirit of this new paragraph will be incorporated into the rules. I understand that the Civil Procedure Rule Committee is now discussing this.
In the meantime it is hoped that it will stem the flow of applications for a minor extension of time.
All other courts are free, but not obliged, to follow this direction. Some have started immediately, unsurprisingly given reports of two month backlogs caused entirely by such applications.
Text:
The parties may, by prior agreement in writing, extend the time for directions, in the Order dated xxxxxx, by up to 28 days and without the need to apply to Court. Beyond that 28 day period, any agreed extension of time must be submitted to the Court by email including a brief explanation of the reasons, confirmation that it will not prejudice any hearing date and with a draft Consent Order in word format. The Court will then consider whether a formal Application and Hearing is necessary.
Following my disclosure of the news on Twitter @kerry_underwood on 12 February 2014 The Judicial Office released this statement on 13 February 2014.
“A draft amendment to the clinical negligence model direction used by the Queen’s Bench Masters, allowing for times set by the directions to be extended by up to 28 days by agreement, has been approved by the PQBD and Deputy Head of Civil Justice but no decision has been taken on whether there should be any general change to model directions or to standard directions under the Civil Procedure Rules. This is the subject of discussion within the Civil Procedure Rule Committee and any decision will require the approval of the Master of the Rolls.”
This is a major policy change and a major blow to the Jackson-Mitchell courts and thus a huge victory for the traditional principles of British Justice.
Following this it was revealed that the Ministry of Justice model direction for all multi-track cases now reads:
This paragraph can be used at the end of an Order where it is felt necessary to emphasise the restrictions on extending the timetable and limiting it where appropriate.
NB This will not be necessary in many cases but it may be useful to have in the armoury. It forms part of the TCC standard directions.
1)
2)
3)
4)
5)
6) The above dates and time limits may be extended by agreement between the parties. Nevertheless,
a) The dates relating to trial and pre-trial review cannot be varied without the permission of the court.
b) The remaining dates and time limits may not be extended by more than xx days without the permission of the court.
It appears that most county courts are now using the clinical negligence direction in most cases.
Thanks to Jasmine Murphy, barrister – @JMMHardwicke.
MITCHELL HISTORIC BREACHES: COURT SPONSORED CIVIL WAR
One of the consequences of Mitchell is, unsurprisingly, a much more combative and less collaborative approach to litigation. Obviously it is potentially negligent not to take a Mitchell point which could see the other side’s case thrown out.
The Court of Appeal made this very point in relation to automatic-strike out, the lunatic parent of Mitchell, in
Heer v Tutton [1995] 4 All ER 547
There the Court of Appeal refuse to allow a defendant to argue that the case had been struck out as no defence had been filed within 12 months, even though it had agreed to extend time beyond 12 months.
A central part of the court’s reasoning was that any other decision would place a duty on a defendant to take such a point:
“This doubt must be resolved in favour of the plaintiffs when one contemplates the unconscionable behaviour which would otherwise be open to, and perhaps even incumbent upon, defendants”.
It is no good the courts saying otherwise. Like most lawyers I have advised clients and those working with me that there is no point in resisting an application that the court is likely to grant. What is more, what goes round comes round, that is one day we may want that indulgence from the other party.
That is a sensible and proper way to conduct litigation and an approach strongly encouraged by the courts until Jackson.
All of that has been swept away by Mitchell. The background to any advice is that the court is not likely to grant any indulgence, so resist away and in a future case the other side’s indulgence is irrelevant – you will get Mitchelled by the court anyway.
This has developed into parties bringing up historical breaches, that is “You filed your witness statement 10 minutes late two years ago – you cannot use that evidence”.
This is the Jimmy Savile effect.
So how are the courts treating historical breaches.
As Gordon Exall has pointed out http://civillitigationbrief.wordpress.com/author/gexall/
“Several months ago, if not several weeks ago, anyone running this type of argument would be subject to strong professional strictures. Now such arguments appear to be commonplace”.
In M A Lloyd v PPC International Ltd [2014] EWHC 41 (QB)
analysed above the breach was not in fact historical. At the time of the defendant’s application the claimant had not filed the appropriate witness statement or skeleton and thus there was nothing for the defendant to respond to. True it was an old breach, but it was a continuing breach which made it even worse.
The significance of Lloyd is that the parties cannot expect the court “to adjudicate passively upon the applications of the parties or to rubber stamp their reciprocal procedural indulgences but actively to manage cases”.
So going forward consent is clearly dead as a concept in relation to relief from sanctions applications, even when there is no automatic sanction. A court order must be obtained. That leaves open the question of lawfulness and effectiveness of any past breach, even if that breach was by consent, eg the parties agreed to extend time for serving witness statements.
Must the parties seek relief from sanctions? If so, as the application may be months or years after the breach then, following Mitchell, the application would be refused.
The doctrine of estoppel is unlikely to help one party resist the application of another; parties are not free to contract out of the CPR.
This issue was dealt with in the context of an extension of time for serving particulars of claim in
Thomas v The Home Office [2006] EWCA Civ 1355
which I have analysed in detail above. CPR 2.11 required the agreement to be in writing. It was not; it was an oral agreement. That did not stop the agreeing defendant successfully challenging the validity of the extension.
As we are talking of historical breaches you may be interested to know that the same conclusion was reached in relation to section 4 of the Statute of Frauds 1677 – see
Actionstrength Ltd v International Glass Engineering IN. GL. ENSpA [2003] UKHL 17
It is unwise to rely on the defence of estoppel.
In many cases BOTH parties will have been in breach and will both risk being struck out. The problem is that dual strike out always punishes the claimant; obviously a defendant is generally happy to have the claim brought to an end.
I have referred above to
Heer v Tutton [1995] 4 All ER 547
but those were more tolerant times. No judge then would have dared talk about the interests of justice between the parties being secondary to the efficiency of the State.
I fear that the Jackson courts will depart from this decision.
The issue of historical breach was considered very recently in
Meehan v Manley and Churchill Insurance Company Limited – High Court, Queen’s Bench Division, 29 January 2014 – unreported.
a personal injury case where the parties were ordered to serve lay evidence on 21 June 2013, but agreed to an extension and the claimant served its evidence between 4 July and 14 August 2013.
On 4 November 2013 a Case Management Conference took place and the issue was not raised by anyone.
On 23 January 2014 the defendant told the claimant that at the forthcoming Case Management Conference on 29 January 2014 they would take the point that the claimant had served its evidence out of time.
There the claimant submitted that:
- This was a historical breach by consent by the defendants, who were therefore estopped from opposing any application for relief. Both parties had spent money on experts, having taken into account the statements as evidence, and this was therefore not on all fours with Mitchell.
- Without the stay on the CMC in November, further directions would have been given which would have superseded any non-compliance.
- The defendant had first raised this point four days before the CMC and before that had proceeded on the basis of valid service and medical reports had been served.
- The witness statements were over 300 pages long and were all served within a few weeks of the due date. The defendant’s experts had had sight of them. There was no prejudice.
- The defendants were using the Mitchell decision to review historic breaches and that should not be permitted to succeed.
The Defendant’s arguments
The defendant referred to the cases of Karbhari and Karbhari v Ahmed [2013] EWHC 4042 (QB),
M A Lloyd v PPC International Ltd [2014] EWHC 41 (QB) andMitchell v New Group Newspapers Ltd [2013] EWCA Civ 1537.
It referred to the consequences of failing to serve a witness statement as set out in CPR 32.10 and the decision in Lloydthat even if the parties had agreed an extension, it was of no effect.
The court, not the parties, had to decide the matter.
The claimant had not made an application for relief from sanctions promptly, it was not a trivial breach as the claimant had missed the deadline by six weeks. No good reason had been given for the breach.
The claimant’s solicitors knew that the changes in the CPR were coming and that compliance was vital. It was no longer the case that doing justice between the parties should prevail.
Decision
The Master granted relief from sanctions and had this to say about Mitchell:
“…………… this has sent seismic convulsions through the litigation lawyer profession since 27 November 2013. The litigation culture has changed and indeed the Court of Appeal recognise this in particular at paragraph 46 ……. In this case, I ordered the exchange of witness statements to take place by 21 June 2013. According to Rule 32.10” ……..
What does that mean? What does it say? Does it in fact debar the Claimant from relying on written witness evidence? Is it that witnesses may not be called to give oral evidence at trial?
“It, perhaps, should have been obvious as of 1 April 2013 but plainer still in this corridor that parties felt the seismic convulsions after Mitchell was decided by the Court of Appeal. Here, by my Order, the witness statements were due on 21 June when, in fact, they were served between 4 July and finally 14 August”.
The Master then considered the facts of this case against the background of the new culture.
“There was little or no good reason for the lateness of service and it is right to say that the failure to serve in time acquiesced by the Defendants, not only at the time (6 weeks between July and August 2013, ante-dating Mitchell) which was then promulgated to the Defendants’ experts to consider, meant that the witness statements had formed part of the evidence.
At the hearing considered for relief for the late service of expert report, no mention was made on 4 November 2013, that the Claimant was in breach of this Order and would be required to apply for relief for late service of the lay evidence as well”.
“The decision in Mitchellcomes and goes in late November and here the Claimant is historically in breach of an Order and does not make an Application. For relief from sanction (no sanction having been imposed) time passes. With today’s hearing approaching, the Defendants, 4 days before the hearing, put the Claimant on notice that relief would be required”.
“Although I am not entirely sure what the sanction is under CPR 32.10 as to whether or not it is the case that no reliance on the statements can be had at all, or whether it is simply oral evidence.
In any event, Mr Russell QC for the Defendant relies on two decisions of Turner J which both post-date Mitchell and I am quite satisfied that the breaches in those two cases occurred after the Mitchell decision and were, in fact, entirely different. In those cases, the defaulting party was in flagrant breach and, frankly, in light of the Mitchell decision it was very cheeky in the extreme for them to apply for relief. Here, it is a completely different matter. In this case the Defendant acted in an opportunistic way. The Defendant set out to take advantage of the Mitchell decision applying what I would call the “retrospectoscope” on past events.
If the Claimant failed to be granted relief today, procedure would, in fact, become the mistress rather than the handmaiden of justice. If all of these matters had occurred after Mitchell and if the Defendant had taken the point and not acted in the way that they did, there was some justification in Mr Cooksley QC’s argument that the Defendants were now estopped from arguing the point as they had accepted the witness evidence. The Claimant took the view, wrongly, that there was no need to apply for relief because no-one took the point. The Defendants then took the point and leave really needed to be sought.
Although there is no reason given for all late service, there is a reason for Dr Meehan’s late service of her statement as she was facing some difficulties and needed to preserve her career. This was one of the reasons why the Stay was imposed at the last hearing.
For all of those reasons, the Claimant is entitled to be granted relief from sanction which may arise and therefore the Claimant has permission under 32.10, to call oral evidence of these witnesses of fact on a presumption that they would be required at trial.”
Now this is a helpful and sensible decision but I am not sure that it can be squared with Mitchell.
One of the key points in this case is that until the Mitchell decision litigants were unaware of the full consequences of the changes:
“It has to be borne in mind that in the summer of 2013, although we all knew about the change in culture, even the Court of Appeal acknowledged that it would take some time for that change in culture to take place. No-one realised the full extent of the new Rules and how those new Rules were to be applied in practice. The defendant didn’t either and if they had done, they would have taken advantage of the claimant’s solicitor’s mistake in not applying before the deadline had passed for an extension”.
That begs many questions.
How unjust is the Mitchelldecision if the entire legal profession, including the Court of Appeal, was unaware of the consequences?
How could Mr Mitchell and his solicitors, like the claimant here in default in the summer of 2013, have known the Draconian nature of the new Rules until the Mitchell decision itself? In this case the default took place after 21 June 2013, which was the deadline for exchanging witness statements, and the default last until 14 August 2013. In Mitchell the default started on 11 June 2014 and lasted until 17 June 2014. Thus the whole of the Mitchell default occurred before ANY of the default here. So how could Mr Mitchell and his advisers, but not Mr Meehan and his advisers be expected to know? This is Dr Who and the Tardis territory.
Why did the Court of Appeal in Mitchellnot allow relief from sanctions but give a warning to the profession that in future no such indulgence would be granted?
That is the traditional way of getting the message out. It has the benefit of doing justice.
This decision – obviously right in my view – is an attack on the Court of Appeal. Why else make the point that
“even the Court of Appeal acknowledged that it would take some time for that change in culture to take place”, and see the Mitchell chronology above.
The Master is of course indicating that in Mitchell, as with the defendant here, the Court of Appeal was using a “retrospectoscope”. (A medical imaging device for looking at the past and seeing what could have been done better).
Furthermore it is self-evident that serving witness statements late should be regarded as more serious than serving a budget late.
Watch this space.
SHAFTS OF LIGHT
It is likely that the combination of Parliament changing the law and the clinical negligence announcement, dealt with above, will alter fundamentally the courts’ approach to historical breach. As both Parliament and the President of the Queen’s Bench Division have now specifically sanctioned a court direction that parties be free to extend time by consent by up to 28 days it is hard to see how now a historic application of that principle by lawyers warrants sanction.
Some judges have engineered a clash with Parliament. There can only ever be one winner and Parliament has won.
In Summit Navigation Ltd and others v Generalia Romania Asigurare and others [2014] EWHC 398 (Comm)
Mr Justice Leggatt strongly criticized the defendants for taking a Mitchell point and ordered them to pay costs.
This is a significant decision, coming as it did just after the Clinical Negligence directions announcement. It unquestionably marks a judicial rowing back from Mitchell, but also brings in to sharp focus the dilemma of every litigator, which is whether to take a Mitchell point and risk severe criticism and an adverse costs order or get sued for negligence for declining to take such a point, with the client suing for loss of a chance to have won the case on a Mitchell technicality.
The first two paragraphs of the judgment say it all:
- The decision of the Court of Appeal in Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537, [2013] 6 Costs LR 1008, on the effect of the new CPR 3.9, has rightly been described as a “game changer”: see Michael Wilson & Partners Ltd v Sinclair [2013] EWCA Civ 1732, per Lewison LJ. It is important for litigants to understand, however, how the rules of the game have been changed and how they have not. The defendants in this case have sought to rely on Mitchell to turn to their tactical advantage a short delay by the claimants in providing security for costs which in itself had no material impact on the efficient conduct of the litigation. They have argued that the consequence of the claimants’ default should be that the action remains permanently stayed.
- Unlike the claimants’ default itself, the defendants’ response to it has had a very serious impact on the litigation. The whole timetable for the proceedings has been derailed, significant costs have been incurred and court time has been wasted to the detriment of other court users. In other words, the reliance placed on Mitchell in this case has had the very consequences which the new approach enunciated by the Court of Appeal in Mitchell is intended to avoid.
Here the claimants failed to provide further security for costs as ordered by the court. This resulted in the action being stayed; the bond for security of costs was available nine days after the deadline but the defendant refused to consent to the stay being lifted, saying it would rely on Mitchell.
The court held that the stay was a sanction and thus CPR 3.9 and Mitchellpotentially came into play and that CPR 3.8 and 3.9 are “a coherent scheme” and that a distinction should not be drawn between a “consequence” of failure to comply and a “sanction” for failure to comply with a rule, practice direction or court order. I interpret r.3.8(3) and r.3.8(1) as dealing with the same situation, in the one case before, and in the other case after, the time specified for doing an act has expired. I can see no sensible reason for supposing that the provisions were not intended to be symmetrical. It follows that any application to disapply a consequence specified in a court order for failing to do something within a time specified in the order is an application for relief from a “sanction” within the meaning of these rules”.
(Paragraph 27 of the judgment).
However the court here said that not all sanctions are equal and they are not all to be treated as equivalent for the purposes of CPR3.9.
“There is, in my view, a significant difference between an order which specifies the consequence that proceedings are to be stayed if security for cots is not provided by a specified date and an order that, unless security is provided by a specified date, the claim will be struck out. Such “unless” orders are of course commonly made when security of costs is not provided but not, at any rate in the commercial court, before the party ordered to provide the security has first failed to do so within a specified time”.
The sanction of failing to file a costs budget on time was strike-out of the budget except for the court fees. That was the case in Mitchell; it was different. Mitchelldid not apply to the situation here.
The court considered the traditional approach of the courts to security of costs matters as set out in
Radu v Houston[2006] EWCA Civ 1575
and
SC GD Petrol SRL v Vitol Broking [2013] EWHC 3920 (Comm).
Significantly the court here said:
“38. If I am wrong in this analysis and the approach in Mitchell is indeed applicable in this case, I would still come to the clear conclusion that the claimants’ application for relief should be granted”.
The court then analyzed the Mitchell Principles and held the breach to be trivial, saying:
- “In my view, the present case falls squarely within the category of case where the non-compliance with a court order can properly be regarded as “trivial”. With the greatest respect to the Court of Appeal, I should prefer to use a different adjective, since the whole thrust of the new approach is to inculcate a culture of compliance with rules and orders and to dispel an attitude which trivialises even “minor” breaches. I would therefore prefer to say that the default in this case was not material. But whatever label is used, this case fits exactly one of the examples given by the Court of Appeal in Mitchell at [40] – namely, “where the party has narrowly missed the deadline imposed by the order, but has otherwise fully complied with its terms”.
Even if not trivial “there was sufficiently good reason for the default”, namely the absence of an underwriter or the inefficiency of the brokers.
In a telling passage the court said:
The just result
“48. Even if I had not concluded that the default can properly be characterised as “trivial” or due to a sufficiently good reason, I would still have considered it just to grant the relief sought in this case. The fact that the claimants missed the deadline for putting up security for costs by a day did not in itself have any impact on the efficient conduct of these proceedings, nor on the wider public interest of ensuring that litigants can obtain justice efficiently and proportionately. On the facts of this case, therefore, I am unable to conclude that the first consideration specifically mentioned in CPR 3.9 – that is, the need for litigation to be conducted efficiently and at proportionate cost –weighs against the grant of relief.
49. There remains, of course, the further consideration of the need to enforce compliance with rules, practice directions and court orders which, even on its own, must clearly be given substantial weight. But, as the Master of the Rolls emphasised in his lecture on the Jackson reforms in words approved by the Court of Appeal in Mitchellat [38], it is not the aim of the reforms to turn rules and rule compliance into “trip wires”, nor into “the mistress rather than the handmaid of justice”, nor to render compliance “an end in itself”. It seems to me that this would be precisely the result of refusing relief in a situation where, as here, there has been non-compliance with a rule or order but the objective which the insistence on compliance seeks to serve of ensuring that litigation is conducted efficiently and at proportionate cost has not been impaired”.
The court then firmly blamed any delay on the defendant for taking the Mitchellpoint:
“54. In my view, the defendants’ conduct in refusing to agree to lift the stay was unreasonable. The grounds relied on for arguing that the claimants’ default was material were without merit. The defendants’ stance disregarded the duty of the parties and their representatives to cooperate with each other in the conduct of proceedings and the need for litigation to be conducted efficiently and at proportionate cost. It stood Mitchellon its head”.
The defendants were ordered to pay costs and in a key passage the court said:
“The defendants seen to have viewed their opposition to the stay being lifted as a potentially free ride whereby, if successful, they would obtain a fortuous dismissal of the claim without a trial and, if unsuccessful, would still have their costs paid by the claimants as the defaulting party. It is important to discourage that approach”.
Historic breaches and tolerance
In Lakatamia Shipping Co Ltd v Nobu Su and others [2014] EWHC 275 (Comm)
the Commercial Court, Mr Justice Hamblen, considered various relief from sanctions issues.
Due to various misunderstandings the defendant, in breach of an unless order, was 46 minutes late in providing standard disclosure.
The High Court held that that was trivial, but that there was no good reason for the default.
Consequently relief was granted; the application had been made promptly. The combination of trivial breach and prompt application would normally mean that relief should be granted – see Mitchell, paragraph 40:
“……the court will usually grant relief if there has been no more than an insignificant failure to comply with an order: for example……….where the party has narrowly missed the deadline imposed, but has otherwise complied with the order”.
Previous alleged defaults are not relevant as to whether the current default is trivial.
There was no prejudice to the claimant, nor to other court users.
Courts wishing to adopt a tolerant approach to historic agreements/breaches will find support in
Wilkey v BBC [2002] EWCA Civ 1561
a case involving, effectively, relief from sanctions in relation to deemed service of claim forms, another area where the Rule Committee did not cover themselves in glory. These provisions have, happily, long since been repealed.
The rules had deeming provisions concerning service which resulted in claim forms being deemed to be served outside the four month time limit even though they had actually arrived within that time limit.
In Godwin v Swindon Borough Council [2002] 1 WLR 997 and
Anderton v Clwyd County Council and other appeals [2002] 3 All ER 813
the Court of Appeal, in a pre-Jackson-Mitchell spasm, said that retrospective applications to extend time would only be granted in exceptional circumstances.
The issue was revisited by the Court of Appeal itself in the Wilkey case. Broadly the court said that where service had taken place before the legal position was clear then relief would be granted. If not, it would not.
Thus the “exceptional” exception applied to pre-Anderton service, but not post-Anderton service.
In Wilkey the court said:
“18. The solution I would propose to the problem is this. In category 2 cases which, like the present (and, as I am led to believe, like a number of other appeals now awaiting hearing in this court) involve deemed late service before this court’s decision in Anderton, the rule 6.9 dispensing power should ordinarily be exercised in the claimant’s favour unless the defendant can establish either that he would suffer prejudice (apart, obviously, from the loss of his Limitation Act defence) or some other good reason why the power should not be exercised.
Merely to establish that the claimant has been guilty of avoidable delay in either the issue, or the service, of the claim form, or both, would not generally constitute such good reason. There will always have been some avoidable delay. Similarly, the fact that the claim looks unpromising would not generally be a good reason for refusing to exercise the dispensing power in a pre-Anderton category 2 case. In a post-Anderton case, however, the dispensing power should in my judgment ordinarily not be exercised in the claimant’s favour. These cases, albeit within category 2 and therefore in one sense to be regarded as exceptional, to my mind fall foul of paragraph 2 of the court’s judgment in Anderton. In these cases “a strict approach” should generally be adopted.
19. This approach, in my judgment, will not only provide a useful guide as to how the court may be expected to exercise its discretion in these cases, but it also follows such guidance on the point as the judgment in Anderton affords. It would mean that the court in post-Anderton cases, quite logically, would be the readier to reject the claimant’s explanation for late service and to criticise his conduct of proceedings, both of these being identified in paragraph 59 of the judgment in Anderton as relevant considerations”.
The European Court of Justice often adopts this policy.
Thus a court may now care to consider a pre-M A Lloyd v PPC International Ltd [2014] EWHC 41 (QB)
(see below) historical extension to be excusable, but not one since.
GRIM DAY FOR JUSTICE: MITCHELL CONSIDERED
In Mitchell v News Group Newspapers [2013] EWCA Civ 1537,27 November 2013
the Court of Appeal dismissed the appeal of Mr Mitchell against the refusal of Master McCloud to grant relief from sanctions.
One of the richest ironies in English legal history is that the Court of Appeal in this case – at its most sanctimonious – got the neutral citation number wrong. I have a copy of the original judgment, bearing the seal of the Royal Courts of Justice, and with the neutral citation as [2013] EWCA Civ 1526. This was later corrected to Civ 1537. The Court of Appeal appears to have granted itself relief from sanctions in the very case it banned them for everyone else.
Strictly the appeal was against two decisions, the first being the Master’s decision that as Mr Mitchell had failed to file his costs budget in time he was to be treated as having filed a costs budget comprising only the relevant court fees (CPR 3.14) and the second being the Master’s refusal to grant relief from that sanction.
The costs budget in question totalled £506,425.00 and so, apart from the court fee element, that is the amount potentially lost by Mr Mitchell as a result of this decision. Given that the defendant’s budget was for £589,558.00, this appears to be a realistic figure.
This was the first time the Court of Appeal has ruled “on the correct approach to the revised version of CPR 3.9 which came in to force on 1 April 2013 to give effect to the reforms recommended by Sir Rupert Jackson.”
At paragraph 1 the Court of Appeal said:
“The question at the heart of this appeal is: how strictly should the courts now enforce compliance with rules, practice directions and court orders?”
Thus the Court of Appeal made no distinction between court orders and rules and practice directions, even though practice directions do not have the force of law and in many instances are hopelessly drafted, as indeed are many of the Jackson-related Civil Procedure Rules.
The Court of Appeal also accepted that the traditional approach of the courts was to excuse non-compliance if any prejudice caused to the other party could be remedied, usually by an appropriate costs order.
Here the budget was filed one day before the Case Management and Costs Budget hearing, that is six days late.
Master McCloud imposed what she described as “a mandatory sanction” of deeming the budget to comprise court fees only.
Master McCloud then dismissed the subsequent application for relief from that sanction.
The Court of Appeal dismissed the technical grounds of appeal, that is whether CPR 3.14 applied by analogy to a pre-1 April 2013 case and whether there was a difference between filing a budget late and not filing one at all.
Thus the issue is the key one set out by the Court of Appeal in paragraph 1 of its decision and which I have set out above.
The Court of Appeal held, correctly and sensibly in my view, that “the considerations to which the court should have regard when deciding whether it should “otherwise order” (CPR 3.14) – “unless the court otherwise orders”) are likely to be the same as those which are relevant to a decision whether to grant relief under CPR 3.9. “In each case, in deciding whether to “otherwise order”, the court must give effect to the overriding objective: see rule 1.2(a)” (Paragraph 32 of the judgment).
The Court of Appeal pointed out (paragraphs 34 and 35) that Sir Rupert Jackson had softened his approach between writing his Preliminary and Final Reports:
“However, I do not advocate the extreme course which was canvassed as one possibility in [the Preliminary Report] paragraph 43.4.21 or any approach of that nature.”
The “extreme course” was that non-compliance would no longer be tolerated, save in “exceptional circumstances”. Instead he recommended that sub-paragraphs (a) to (i) of CPR 3.9 be repealed and replaced by the wording which is now in the new rule, saying that the new form of words:
“does not preclude the court taking into account all of the matters listed in the current paragraphs (a) to (i). However, it simplifies the rule and avoids the need for judges to embark upon a lengthy recitation of factors. It also signals the change of balance which I am advocating.”
In a deeply worrying part of the judgment the Court of Appeal, at paragraph 39, specifically endorsed the approach – “We endorse this approach.” – set out in paragraphs 25 to 27 of the 18th implementation lecture on the Jackson reforms delivered on 22 March 2013 by the Master of the Rolls.
Before considering what approach has now been endorsed let us look at the genesis of this approach:
- The Court of Appeal, of its own motion and without reference to , or the permission of, Parliament decides to review the civil justice system.
- A judge, Sir Rupert Jackson, immediately elevated to the very same Court of Appeal, is appointed to prepare the report.
- Jackson LJ’s Preliminary and Final Reports are published. The Final Report provokes a storm of criticism unmatched in recent history in relation to any report by a member of the judiciary.
- The Master of the Rolls makes a speech saying how these extremely controversial and socially divisive reforms are to be implemented.
- The Court of Appeal, comprising the Master of the Rolls and two other judges, endorses that approach.
As Mandy Rice-Davies would have put it “They would, wouldn’t they?”
Thus the Court of Appeal has decided upon a review of the civil justice system, a Court of Appeal judge has produced a report subject to the most bitter criticism and controversy imaginable, a Court of Appeal Judge gives an implementation speech and the Court of Appeal endorses that speech.
That is not, and never should be, the way we do things in the United Kingdom.
So what approach did the Court of Appeal endorse? The following are quotes from the 18th implementation speech; and are extensively quoted in the Court of Appeal judgment.
“…Jackson reforms were and are not intended to render the overriding objective, or rule 3.9, subject to an overarching consideration of securing justice in the individual case. If that had been the intention, a tough application to compliance would have been difficult to justify and even more problematic to apply in practice.”
“…the relationship between justice and procedure has changed.”
So, procedure now triumphs over justice, although the Court of Appeal, entirely unconvincingly, denies that.
“The tougher, more robust approach to rule-compliance and relief from sanctions is intended to ensure that justice can be done in the majority of cases. This requires an acknowledgement that the achievement of justice means something different now.”
The Court of Appeal may as well have quoted Alice Through the Looking Glass.
“When I use a word, it means just what I choose it to mean.”
Justice is not a concept that should be changed by diktat of an unelected Court of Appeal judge, or indeed anyone else.
Of the tough approach and the rules and obligations
“…more importantly they serve the wider public interest of ensuring that other litigants can obtain justice efficiently and proportionately, and that the court enables them to do so.”
Given the issues raised in the Mitchell/press/police/Parliament cases it is breathtakingly Orwellian to conceive of depriving Mr Mitchell of the prospect of any costs as in “the wider public interest.”
At paragraphs 40 to 43 the Court of Appeal sets out guidance as to how the new approach should be applied in practice, although this writer takes the view that in this decision the Court of Appeal has NOT followed that guidance.
I set out those paragraphs at the end of this piece.
The court should grant relief if the non-compliance is trivial AND an application is made promptly.
The court should “usually grant relief if there has been no more than an insignificant failure to comply…failure of form rather than substance; or where the party has narrowly missed the deadline imposed by the order, but has otherwise fully complied with its terms.”
Isn’t that what happened here?
The Court of Appeal accepted that the need for solicitors to take on less work “may seem harsh especially at a time when some solicitors are facing serious financial pressures. But the need to comply with rules, practice directions and court orders is essential if litigation is to be conducted in an efficient manner. If departures are tolerated, then the relaxed approach to civil litigation which the Jackson reforms were intended to change will continue.”
The type of acceptable reason may be “that the party or his solicitor suffered from a debilitating illness or was involved in an accident.”
Entirely at odds with logic of its decision the Court of Appeal said:
“We should add that applications for an extension of time made before time has expired will be looked upon more favourably than applications for relief from sanction made after the event.”
I fail to see how that has any relevance to anything. What is the qualitative difference between an application made 6 hours before the deadline and one made 12 hours later?
That is indeed a triumph of procedure over substance, of technicality over justice, of systems over freedom, of rules over liberty.
This is demonstrated by the Court of Appeal’s criticism of Mr Justice Smith for allowing an extension of two days, yes two days, for the service of Particulars of Claim. The Judge had said:
“Nor do I accept that the change in the Rule or a change in the attitude or approach of the courts to applications of this kind means that relief from sanctions will be refused even where injustice would result.”
The Court of Appeal quoted that statement and rejected it:
“51. It seems to us that, in making this observation, the judge was focusing exclusively on doing justice between the parties in the individual case and not applying the new approach which seeks to have regard to a wide range of interests.”
Thus Mr Justice Smith is criticized for making a ruling that avoided injustice in a case of trivial breach.
The terms of the Judicial Oath are
“I do swear by Almighty God that I will well and truly serve our Sovereign Lady Queen Elizabeth the Second…and I will do right to all manner of people after the laws and usages of this realm, without fear or favour, affection or ill will.”
Right has not been done to Mr Mitchell. Right will not be done to many other fellow citizens if this wholly punitive, disproportionate and unjust decision is followed.
Shame on you.
“40. We hope that it may be useful to give some guidance as to how the new approach should be applied in practice. It will usually be appropriate to start by considering the nature of the non-compliance with the relevant rule, practice direction or court order. If this can properly be regarded as trivial, the court will usually grant relief provided that an application is made promptly. The principle “de minimis non curat lex” (the law is not concerned with trivial things) applies here as it applies in most areas of the law. Thus, the court will usually grant relief if there has been no more than an insignificant failure to comply with an order: for example, where there has been a failure of form rather than substance; or where the party has narrowly missed the deadline imposed by the order, but has otherwise fully complied with its terms. We acknowledge that even the question of whether a default is insignificant may give rise to dispute and therefore to contested applications. But that possibility cannot be entirely excluded from any regime which does not impose rigid rules from which no departure, however minor, is permitted.
If the non-compliance cannot be characterised as trivial, then the burden is on the defaulting party to persuade the court to grant relief. The court will want to consider why the default occurred. If there is a good reason for it, the court will be likely to decide that relief should be granted. For example, if the reason why a document was not filed with the court was that the party or his solicitor suffered from a debilitating illness or was involved in an accident, then, depending on the circumstances, that may constitute a good reason. Later developments in the course of the litigation process are likely to be a good reason if they show that the period for compliance originally imposed was unreasonable, although the period seemed to be reasonable at the time and could not realistically have been the subject of an appeal. But mere overlooking a deadline, whether on account of overwork or otherwise, is unlikely to be a good reason. We understand that solicitors may be under pressure and have too much work. It may be that this is what occurred in the present case. But that will rarely be a good reason. Solicitors cannot take on too much work and expect to be able to persuade a court that this is a good reason for their failure to meet deadlines. They should either delegate the work to others in their firm or, if they are unable to do this, they should not take on the work at all. This may seem harsh especially at a time when some solicitors are facing serious financial pressures. But the need to comply with rules, practice directions and court orders is essential if litigation is to be conducted in an efficient manner. If departures are tolerated, then the relaxed approach to civil litigation which the Jackson reforms were intended to change will continue. We should add that applications for an extension of time made before time has expired will be looked upon more favourably than applications for relief from sanction made after the event.
42. A similar approach to that which we have just described has been adopted in relation to applications for an extension to the period of validity of a claim form under CPR 7.6.
In Hashtroodi v Hancock [2004] EWCA Civ 652, [2004] 1 WLR 3206, this court said that (i) the discretion to extend time should be exercised in accordance with the overriding objective and (ii) the reason for the failure to serve the claim form in time is highly material. At para 19, the court said:
“If there is a very good reason for the failure to serve the claim form within the specified period, then an extension of time will usually be granted….The weaker the reason, the more likely the court will be to refuse to grant the extension.”
43. This approach should also be adopted in relation to CPR 3.9. In short, good reasons are likely to arise from circumstances outside the control of the party in default: see the useful discussion in Blackstone’s Guide to The Civil Justice Reforms 2013 (Stuart Syme and Derek French, OUP 2013) at paras 5.85 to 5.91 and the article by Professor Zuckerman “The revised CPR 3.9: a coded message demanding articulation” in Civil Justice Quarterly 2013 at pp 9 to 11.”
DIVISION IN COURT OF APPEAL
Mitchell and Abercrombie compared:
The Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1526 decision has received all of the attention but just over one month earlier the full Court of Appeal came to a very different conclusion in the case of: –
Abercrombie and Others v Aga Rangemaster Ltd (2013) EWCA Civ 1148.
I analyze the case below but the key quote, itself from a 19th century case, is this:
“In a passage in Smith v Cropper [1885] 26 Ch D 700 which was once much cited in interlocutory proceedings in the High Court Bowen LJ said (at p. 711):
“(I)t is a well-established principle that the object of courts is to decide the rights of the parties, and not to punish them for mistakes they make in the conduct of their cases by deciding otherwise than in accordance with their rights…. I know of no kind of error or mistake which, if not fraudulent or intended to overreach, the court ought not to correct, if it can be done without injustice to the other party. Courts do not exist for the sake of discipline, but for the sake of deciding matters in controversy, and I do not regard such amendment as a matter of favour or of grace.”
In an obvious and direct challenge to the decision which this division of the Court of Appeal no doubt knew would be given in Mitchellthe Court of Appeal here added its own post – Jackson note:
“The qualifications about avoiding “injustice to the other party” and cases of “intention to overreach” (that is, abuse of procedures or pursuit of tactical advantage) are of course important and one would nowadays add a reference to the importance of proper case management. Nevertheless Bower LJ’s observations are a salutary warning against too schoolmasterly an approach.” (My bold).
Thus, there are now two lines of Court of Appeal authority and the so-called lower courts are free to choose between them; they are not obliged to follow the Mitchell decision. It also means that in any relevant case leave to appeal to the Supreme Court should be granted so that that court may clarify the law in relation to relief from sanctions; in reality the issue is the major constitutional one of whether courts seek to do justice in an individual case or give priority to the efficiency of the State over justice.
The Judges, significantly, comprised none of the “Jackson 5”, who have arrogated to themselves, by what right I am unsure, the right to hear Jackson-related appeals. Jackson LJ who wrote the Jackson report is one of the Jackson 5, which tells all that needs to be told about the chances of a fair hearing in such cases. There can never have been a more blatant example of being a judge in your own cause.
Abercrombie was not obviously a Jackson case and so was dealt with by a normal Court of Appeal, consisting of Lord Justice Underhill, who gave the lead judgment, Lord Justice Kitchin and Sir Terence Etherton, Chancellor of the High Court.
The decision was handed down on 11 October 2013, that is 47 days before Mitchell, but at a time when everyone in the legal world knew that Mitchell was shortly to be heard by the Court of Appeal and also knew the issues.
The facts concern complex provisions in relation to guarantee payments and the case has been reported as an important employment law decision and its Jackson – related significance has been missed, but very significant it is.
In employment tribunals limitation goes to jurisdiction; it is not a defence. Thus if a claim is out of time the employment tribunal has no jurisdiction to hear it, unless certain limited circumstances apply. It is always an issue for the tribunal; a respondent is not free to agree an extension of limitation nor to agree not to take the point.
Here the claimants had the option of bringing the claim under either section 34 of the Employment Rights Act 1996 or section 23 of the same Act. Section 23 claims triggered a now repealed obligation to engage in a statutorily prescribed dispute resolution procedure. Failure to follow that procedure led to the claims being barred, that is the employment tribunal had no jurisdiction to hear them.
That is what happened here. The claimants then applied, during proceedings and well beyond the primary and jurisdictional time limit, to amend the pleadings so as to constitute the claims as ones under section 34 thus avoiding the statutory bar for failing to follow the dispute resolution procedure.
Thus what was being sought here was effectively relief in relation to a far greater fault than late filing of a costs budget.
The employment tribunal refused leave to amend and the Employment Appeal Tribunal upheld that decision, but the Court of Appeal here overturned it and gave leave to amend.
If the Court of Appeal had left it that you may think that I am giving the decision a little too much weight as an anti-Mitchell one, but the quotation I have set out above proves this not to be the case.
The Court of Appeal recognized that the issue was within the discretion of the original judge and held that he had exercised that discretion wrongly.
The Court of Appeal quoted, with approval, from the case of: –
Selkent Bus Co. Ltd v Moore [1996] ICR 836.
“Whenever the discretion to grant an amendment is involved, the Tribunal should take into account all [Court’s underlining] the circumstances and should balance the injustice and hardship of allowing the amendment against the injustice and hardship of refusing it.”
“An application should not be refused solely because there has been a delay in making it. There are no time limits laid down in the Rules for the making of amendments. The amendments may be made at any time – before, at, even after the hearing of the case. Delay in making the application is, however, a discretionary factor. It is relevant to consider why the application was not made earlier and why it is now being made: for example, the discovery of new facts or new information appearing from documents disclosed on discovery. Whenever taking any factors into account, the paramount considerations are the relative injustice and hardship involved in refusing or granting an amendment. Questions of delay, as a result of adjournments, and additional costs, particularly if they are unlikely to be recovered by the successful party, are relevant in reaching a decision.”
At paragraph 49 of its judgment there the Court of Appeal said:
“As the present case only too clearly illustrates, some areas of employment law can, however regrettably, involve real complication, both procedural and substantial; and even the most wary can on occasion stumble into a legal bear-trap. Where an amendment would enable a party to get out of the trap and enable the real issues between the parties to be determined, I would expect permission only to be refused for weighty reasons- most obviously that the amendment would for some particular reason cause unfair prejudice to the other party.”
The Court of Appeal then added its key footnote 6 to paragraph 49 which I have quoted in full at the beginning of the piece.
In Nelson v Circle Thirty Three Housing Trust Ltd 2014] EWCA 106
the Court of Appeal granted relief from sanctions without reference to the criteria of CPR 3.9, although it did refer to the rule itself, or the decision in Mitchell, apparently treating Mitchell with such disdain that it refused even to consider it.
This was a claim for possession against a defendant in social housing where the first instance judge made a possession order following the defendant’s failure to comply fully with an unless order in relation to disclosure of specific documents.
Prior to the appeal the defendant produced further documents, together with evidence that her inability to produce the remaining documents was the fault of the bank and that she had contacted the bank five times.
The Court of Appeal took the view that this may have made a difference to the judge’s decision. It decided that it should deal with the matter itself as it was disproportionate to remit and the fresh evidence meant it could deal with it.
The Court of Appeal relied on the judgment of the Court of Appeal in:
Marcan Shipping v Kefalas [2007] 1 WLR 1864
where the court said:
“[35] The second consequence, which follows from the first, is that the party in default must apply for relief from the sanction under rule 3.8 if he wishes to escape its consequences. Although the court can act of its own merit, it is under no duty to do so, and the party in default cannot complain if he failed to take appropriate steps to protect his own interests”.
Here the court then dealt with the matter as an application for relief from sanctions and granted it saying:
“Given the knowledge that we now have as to why there was default, I think that this is a proper case for granting relief from sanctions, which means that the defence is restored. I say that because of the very special circumstances here: first of all, very, very substantial compliance with the disclosure order; and secondly the evidence which we now have that although it was late, the first defendant did make proper efforts to get the necessary documents and that it was not her fault that she did not get them, but the bank’s. Further, she now has them and they have been served on the other side some time ago…….I would therefore allow the appeal”.
The case is significant for a number of reasons:
- it is a reminder that a court can consider and grant relief from sanctions in the absence of a formal application;
- the case of Mitchell was not even referred to, even though it post-dates Mitchell by two months. It is inconceivable that the Court of Appeal here was unaware of the Mitchell decision.
Gordon Exall has suggested in his blog http://civillitigationbrief.wordpress.com/ that the Court of Appeal turned a blind eye to Mitchell. It is one thing for a court to distinguish a decision, it is quite another for it to treat it with such disdain that it does not even consider it.
It should be noted most carefully that there are more Court of Appeal decisions not following Mitchell than there are following it.
In Durrant v Chief Constable of Avon and Somerset Constabulary [2013] EWCA Civ 1624
the Court of Appeal followed the Mitchell decision and allowed a Claimant’s appeal against the lower court’s decision to grant relief from sanctions to a defendant in relation to the late filing of witness statements.
Thus the Court of Appeal re-iterated the tough Mitchell line by refusing relief. However the effect of the original court’s decision to grant relief was that the trial date was lost, that is a six day trial.
The defendant’s conduct was particularly poor. Two witness statements were served a day after the court deadline. The defendant tried to serve a further four statements and made an application for relief from sanctions two months after the original deadline.
Five days before the trial the defendant made a further application for relief from sanctions, so as to allow two more officers to be called as witnesses.
On the morning of the trial the judge granted the defendant relief from sanctions and the trial was adjourned to give the claimant time to consider the defendant’s evidence.
In allowing the claimant’s appeal the Court of Appeal concluded that the initial judge had granted relief from sanctions in circumstances which did not justify relief under CPR 3.9.
What is remarkable here is not the Court of Appeal’s decision, which is clearly right, but that the trial judge granted relief in the first place.
From Woolf onwards, or even before, anything leading to loss of a trial date has been treated severely, and rightly so. I believe the Court of Appeal’s decision would have been the same pre-Jackson.
It is of course such behaviour, here by a state body, that has led to the draconian approach now being taken, but that is throwing the baby out with the bathwater.
In Thevarajah v Riordan and Others [2014] EWCA Civ 14
the Court of Appeal (Richards, Aikens and Davis LJs) overturned an order granting the defendants a second application for relief from sanctions in connection with their failure to comply with an unless order, thus debarring the defendant from defending the claim.
There is nothing surprising about this decision; indeed it is surprising that the defendants were ever given a second chance to apply for, and get, relief, especially as it involved setting aside a previous order refusing relief.
As the court here said:
“The respondents’ ”second bite” application was in substance an application under CPR 3.1(7) for the setting aside of the provisions of Hildyard J’s order refusing relief under CPR 3.9, and as such it had first to satisfy the criteria in Tibbles”. [Tibbles v SIG plc [2012] 1 WLR 2591].
The Court of Appeal criticized the judge saying:
“……even if he had been entitled to give fresh consideration to the question of relief from sanction, his general approach to the application of CPR 3.9 in its present form was wrong in principle. It lacked the robustness called for by the guidance subsequently given by this court in Mitchell”.
SETTING ASIDE DEFAULT JUDGMENT
In Samara v MBI and Partners [2014] EWHC 563 (QB)
the Queen’s Bench Division of the High Court, Mr Justice Silber, was considering whether an application to set aside judgment was made promptly, and whether the Mitchell criteria applied to such applications.
CPR 13.3 reads:
“(1) In any other case, the court may set aside or vary a judgment entered under Part 12 if –
(a) the defendant has a real prospect of successfully defending the claim; or
(b) it appears to the court that there is some other good reason why –
(i) the judgment should be set aside or varied; or
(ii) the defendant should be allowed to defend the claim.
(2) in considering whether to set aside or vary a judgment entered under Part 12, the matters to which the court must have regard include whether the person seeking to set aside the judgment made an application to do so promptly.”
Here it was held that a delay of more than a year meant that the application was not prompt and that the tougher regime under Mitchell applied to promptness under CPR 13.3. However the delay here was so long that the same decision would have been made pre-Mitchell-Jackson.
This was the case even though the defence had a real prospect of success, it was the delay in making the application which was fatal.
In Brett v Colchester Hospital University NHS Foundation Trust[2014] EWHC B17 (Costs) Master O’Hare held that Samara was wrongly decided and declined to follow it. Many commentators agree with Master O’Hare.
The need for promptness has been emphasized in
Durrant v Chief Constable of Avon and Somerset Constabulary [2013] EWCA Civ 1624
and
Thevarajah v Riordan [2014] EWCA 14
as well as in Mitchell itself. All three decision are Court of Appeal ones.
Issues of prejudice or non-prejudice are no longer relevant post Mitchell-Jackson.
Prejudice irrelevant
Mr Justice Coulson, sitting in the Administrative Court, part of the Queen’s Bench Division of the High Court, held that the absence of prejudice was not irrelevant in relation to an application for relief from sanctions.
“……under the new terms of CPR 3.9, the question of prejudice is no longer a reason for allowing or disallowing relief from sanctions: see
Murray and Stokes v Neil Dowlman Architecture Ltd [2013] EWHC 872, at paragraph 19.
The emphasis now is on the need to comply with the CPR, not arguing about the impact or otherwise of a failure to comply”.
MEANING OF “TRIVIAL”
In Mitchell the Court of Appeal said that the courts should not concern themselves with “trivial” breaches, but did not define “trivial”.
In Azure East Midlands Ltd v Manchester Airport Group Ltd [2014] EWHC 1644 (TCC)
the Technology and Construction Court, part of the High Court, held that serving a costs budget two days late, that is five days ahead of the hearing rather than seven, was a trivial breach.
The Judge, His Honour Judge Grant, considered the case law in detail and his own decision in Wain v Gloucestershire County Council and others [2014] EWHC 1274 (TCC)
He found that “when properly analysed and having regard to all the circumstance of the case” it was a trivial breach, for the following reasons:
(1) The delay here was of two days, in the context of a time period or time frame of seven days.
(2) As in Wain, that seven day period, namely for filing or serving a costs budget, is usefully to be compared with the three day period for service of an application notice before its hearing (see CPR rule 23.71).
(3) Again as in Wain, on behalf of the defendant Mr Whitfield has made it entirely clear in the course of his oral submissions that the defendant has not suffered any prejudice by reason of the delay of two days.
(4) Again as in Wain, the parties are each perfectly able to deal with the topic of costs management at today’s adjourned hearing, notwithstanding the fact that the claimant initially served its costs budget with only five clear days rather than seven clear days before the first initial hearing.
(5) Again as in Wain, and unlike the position which obtained in Mitchell, in this case no or no material disruption to the court’s timetable has been caused by the delay on the part of the claimant in filing and/or serving its costs budget. The only additional burden placed upon the court has been the need to take some time during today’s time to consider the point and also for me again to spend some time, both before the commencement of this hearing and during the interim period, to prepare this ruling.
(6) As I have already noted, I refer to and rely on what the Court of Appeal initially stated in paragraph 40 of its judgment in Mitchell, and also on what the Court of Appeal has now stated in its more recent decision in Chartwell Estate Agents. Having regard to both those decisions, I find that the claimant’s initial failure in missing by two days the requirement to file and serve a costs budget seven clear days before the first hearing of a case management conference was, or has become – in the context of the facts of this particular case – no more than an insignificant failure. That is because the court is considering the parties’ costs budgets not at the first, but at the second hearing of the case management conference; that additional passage of time (of some 7 weeks) somewhat dilutes any impact or effect of the initial delay.
(7) Again as in Wain, the reference by the Master of the Rolls to a situation where there has been no more than an insignificant failure is to be borne in mind. The introduction to and the reference to the concept of “significance” in my judgment, continues to resonate with the point made above, namely the relevance of the inter-relation between the breach, i.e., the non-compliance, on the one hand, and its consequences, on the other hand. Such reference to the concept of “significance” would also appear to be consistent with Jackson LJ’s short concurring judgement in Fred Perry (Holdings) Ltd v Brand’s Plaza Trading Ltd [2012] EWCA Civ 224.
17. I therefore, find the non-compliance or breach to be trivial and/or insignificant and/or inconsequential. In those circumstances, as in Wain, I am thus able to “otherwise order” pursuant to CPR rule 3.14.
In Wain v Gloucestershire County Council [2014] EWHC 1274 (TCC)
the Technology and Construction Court, part of the High Court, held that serving a costs budget one day late was a trivial breach and so granted relief from sanctions.
However each case will depend upon its facts.
Indeed in Burt v Linford Christie, Birmingham County Court,10 February 2014 the defendant filed its costs budget one day late, as here, but the court found that that was not a trivial breach.
The Judge also referred to the sanction of getting court fees only if a costs budget is not served as “extremely severe” and said “whether that should remain so is of course a matter for the rules committee”.
The judge found the breach trivial because:
– the delay was of one day in the context of a seven day time frame;
– the notice period for an application notice is three days, so the period here at six days was still double that period;
– there was no prejudice to the other parties;
– all parties were able to deal with costs management at the hearing as planned;
– there was no disruption to the court timetable.
Summary of other cases on meaning of trivial
Romano v K Papers (Blackburn) Ltd (2013) Manchester CC, 29 November 2013
Romano was an industrial deafness case issued in January 2012. A defence was filed and, to allow the parties to consider settlement, the court made an order staying the action until 21 February 2013. In the meantime the firm acting on behalf of the claimant went into administration. The solicitors acting for the administrator wrote to the court and the court extended the stay until 17 June 2012 with the order concluding “at which time and date the claimant’s claim will stand struck out automatically”.
The claimant solicitors had a change of staff. The new solicitor read the order on 18 June 2013 and made an application for relief from sanctions on that day.
The court held that delaying an application to the court to lift a stay by one day was not trivial.
The Mitchell decision did not mean that ‘near misses’ would be overlooked in all cases, especially if the narrow miss had consequences which involved using the resources of the court. Here the default had led to the need for a hearing that would not have been necessary.
Karbhari v Ahmed [2013] EWHC 4041 (QB)
On the first day of a seven day High Court trial the defendant’s counsel indicated that it would be necessary to amend the Defence and introduce a supplementary witness statement seven months late.
The High Court held that thefailure to file the witness statement was not a trivial breach.
The late service of a witness statement amounted to a serious departure from the court order. The new witness statement was not a mere formality but an attempt to introduce a wholly new and inconsistent material to the case.
Harrison v Black Horse Ltd [2013] EWHC B28 (Costs)
The claimants lost at trial and in the Court of Appeal. However the action was compromised following permission to appeal to the Supreme Court being granted. The defendant agreed to pay the claimant’s costs of over £2.5 million. The claimant served a notice of funding in relation to the initial hearing but did not serve any notices in relation to the appeals to the High Court and Court of Appeal.
The High Court held that the failure to provide notice of funding was not trivial.
The rules required the claimants to give notice of the change in funding arrangements and they did not do so in any form.
The Queen on the Application of Royal Free London NHS Foundation Trust (2014) Coulson J
The court ordered the second defendant to pay some of the costs of the first defendant. The second defendant did nothing within the 14 days allowed by the rules to apply to set aside the order and did not comply with the order. Six weeks outside the permitted time the second defendant applied to set aside the order.
The court held that the second defendant’s six week delay in applying to set aside an order was not trivial and relief was not granted.
R & CC v McCarthy & Stone (Developments) Limited (Upper Tribunal (Finance and Tax) 10 January 2014)
HMRC applied and was granted permission to appeal from a decision relating to input tax. The rules required a Notice of Appeal to be supplied within one month of permission being granted. The notice had to be supplied by 6 May. It was in fact supplied on 1 July 2013, that is 56 days late.
It was held that the 56 day delay in providing the notice of appeal was not trivial or minor.
The service of the notice of appeal was an important part of the appeal process without which further progress is impossible.
S E T Select Engineering GmbH v F & M Bunkering Ltd [2014] EWHC 192 (Comm)
This case concerned two applications, one for a stay under CPR Part 11 and the other for judgment in default of defence. The court held that CPR 3.9 was not applicable but did consider the issue of whether the defendant’s application for a stay was made late and the implications of this.
The court held that had CPR 3.9 applied it is highly likely that the delay of one day in making the application would be classed as trivial.
It was stated that “In the present case the challenge was days late, and on one view, only one day late. Although S E T relied upon Mitchell in support of its contention that the time limit should be applied despite the slight infraction, in my view that authority supports the opposite conclusion. At [40] the court expressly refers to the situation where a party has narrowly missed a deadline as one in which the court will usually grant relief. Where there is a genuine dispute as to jurisdiction, one would normally expect an extension to be agreed”.
Summit Navigation Ltd v Generalia Romonia [2014] EWHC 398 (Comm)
The claimant failed to provide a bond of security, due at 4.00pm on 5 December, until 10.00am on 6 December.
Held: The delay of 18 hours to provide security was a trivial breach, and was not material. It had no impact on any other aspect of the conduct of the litigation. The judge was also very critical that the ‘Mitchell’ point had been taken by the defendant in the first place.
Canning v Network Rail (2014) Mitchell J 11 April 2014
The claimant was a widower claiming damages following the death of his wife. He applied for permission to put in an additional witness statement to show that his wife would have been involved in his business. This was extremely late; it was treated as an application for relief from sanctions and the Mitchell principles were applied.
The breach was not a trivial breach.
It was made extremely late and it changed the basis of the way the action was pleaded, and the defendant could not be expected to deal with witness evidence served out of time and the case put forward was contrary to the earlier case meaning that the court would have to spend time deciding which of the two inconsistent statements was correct.
The application was refused.
Utilise v Cranstoun [2014] EWHC 834
The claimant failed to file her costs budgets in time (it was 45 minutes late) and failed to inform the court if further directions were needed in breach of a court order.
Although the failure to file the costs budget was trivial it was one breach in a history of non-compliance. Two or more trivial breached can be viewed as a whole and will not be trivial.
The issue is summarised at paragraph 1 of the judgment.
“The novel point is this: if the breach of a court order attracting sanctions, considered in isolation, can be viewed as trivial, can another trivial breach of the same order result in the first breach being viewed as a non-trivial one?”
The claimant was appealing a decision of the District Judge refusing to grant relief from sanctions.
When the case was allocated to the Multi Track directions were made ordering the parties to agree directions if possible and file agreed directions. The order was silent as to the lodging of costs budgets.
When directions were received the District Judge observed that costs budgets had not been filed and gave the parties until 4.00pm on 11 October 2013, “in default of which the provisions of CPR 3.14 shall apply”.
The court also ordered that by the 15 November 2013 the claimant was to notify the court in writing of the outcome of the negotiations and what, if any, further directions, were required.
The defendants filed their costs budgets before 4.00 pm on the 11 October. The claimant filed its costs budget by fax at 4.41pm on 11 October (a Friday). The covering letter was received by the Court on the 14 October.
The District Judge made an order that the claimant had failed to comply with the earlier order. CPR 3.14 applied and the claimant’s costs budget was treated as extending only to court fees. The order was drawn on the 18 November 2013.
The claimant made an application for relief from sanctions on the 21 November 2013. It was given a time estimate of 10 minutes.
The District Judge held that this was not a trivial breach. The breach had occurred earlier when the parties had failed to file precedent H in accordance with the rules. The court had then given the parties additional time to comply. That order recorded the fact that the parties had failed to file forms H and gave the parties extra time. In the order she had set out the rules in order to ensure that there was no further delay and she had given the parties a significant period of time to comply.
The court had assisted the parties in ensuring that the case was properly progressed and the claimant did not comply.
Although the claimant argued triviality it offered no good reason for the breach. Further this was not an isolated breach. She refused to grant relief from sanctions.
The High Court judgment on appeal sets out the relevant decisions relating to relief from sanctions and costs budgets, including the case of Summit Navigation, which was reported after argument in the appeal had been completed.
Judge Hodge Q.C. held that the District Judge had erred in finding that the costs budget was due at an earlier date. There had been an error in the Form 149C at the time. That form did not amount to a direction for costs budgets to be filed
Having found that the District Judge erred in her construction of the need to file a costs budget earlier, Judge Hodge Q.C. went on to uphold the decision to refuse relief from sanctions.
“52. I am entirely satisfied that where the originally published form is used, then there is no requirement to file a costs budget in form H at the same time as filing the directions questionnaire. To the extent that the District Judge thought otherwise, then I am satisfied that she was wrong. Nevertheless, having said that, the District Judge was fully entitled to make the order that she did on 2nd October 2013 in the exercise of her case management powers. Effectively, she was remedying the deficiency in the original form N149C, although she did not view herself as performing that function.
53. The District Judge, having made the order that she did on 2nd October 2013, the parties had either (i) to apply to vary or set that order aside pursuant to CPR 3.1(7); (ii) to appeal from that order, or (iii) to comply with it. The parties all chose to adopt the latter course; but the claimant failed to comply in the time prescribed for compliance. It was therefore in breach of the order. Absent the grant of relief, the sanction in CPR 3.14 therefore automatically applied:
“Unless the court otherwise orders, any party which fails to file a budget despite being required to do so will be treated as having filed a budget comprising only the applicable court fees.”
Viewed in isolation, the breach in filing form H no more than 45 minutes late on the Friday evening was a trivial breach, even though form H was only treated as having been filed on the following Monday. However, in my judgment the District Judge was entitled to view the quality and magnitude of the breach in the context of the claimant’s non-compliance with another aspect of the court’s same order, namely paragraph 2, which had required the claimant, by 4.00pm on 15 November, to notify the court in writing of the outcome of negotiations and what, if any, further directions were sought, and how such directions would further the overriding objective. That paragraph stated in terms that failure to comply with this direction might result in the application of sanctions.
54. I accept Mr Tucker’s submission that Durrant, at paragraph 48, is authority for the proposition that the court may take other breaches into account when determining whether the breach which has attracted the relevant sanction, and given rise to the need to apply for relief, is trivial or not. To the extent that Mr Justice Hamblen, in paragraph 18 of Lakatamia, considered otherwise, then I consider that his view is incorrect and was expressed per incuriam. I acknowledge that the previous non-compliance in Durrant related to precisely the same direction (as to the service of witness statements) which led to the application of the sanction against which relief in that case was sought. It may be that Mr Justice Hamblen’s approach is warranted in a case, such as that before him, where the earlier defaults are wholly separate and discrete from the trivial non-compliance which the application for relief is intended to address; but that is not so, in my judgment, in the present case. Here, the claimant was in default, not of one, but of two, separate requirements of the same order by the time the application for relief came before District Judge Matharu on 2nd January 2014. Looked at separately, each of those breaches may have been trivial; but, in my judgment, viewed together, the District Judge was entitled to come to the conclusion that they merited some explanation or good reason. None was ever forthcoming.
55. I accept that the District Judge erred in thinking that there had been an earlier breach of the notice in form N149C dated 9th August 2013; but, in my judgment; that error is not sufficient to vitiate the exercise of her discretion. The District Judge’s misapprehension had effectively by then been overtaken by her unchallenged order of 2nd October 2013. In my judgment; the District Judge was entitled to have regard to the non-compliance with paragraph 2 of the order of 2nd October 2013, combined with the lack of any explanation for such non-compliance. In my judgment the District Judge was entitled to take the view that the combination of (i) a second non-compliance with the very same court order, and (ii) the complete absence of any attempt to explain either that non-compliance, or the non-compliance with paragraph 4, rendered what would otherwise have been a trivial breach a non-trivial one. In my judgment, that entitled her to enquire whether any good reason had been shown for non-compliance. On the evidence before her, there was clearly no such good reason shown. I acknowledge that the District Judge’s judgment could have been more fully and clearly expressed, but the fact that it was not is essentially the fault of the claimant (and appellant) in, first, providing a time estimate of only ten minutes and, secondly, not then asking for an adjournment of the application for relief from sanctions. I note, wistfully, that the argument on the substantive appeal in this case took over two hours before me. The claimant has only itself, or its legal representatives, to blame for the peremptory way in which the application was heard and disposed of.
56. In short, therefore, in my judgment there is no good reason for me to interfere with the exercise of the District Judge’s case management discretion. If, however, I am wrong in that, and the appeal court is entitled to review the District Judge’s decision, then for the reasons that I have already given I would have come to the same conclusion.
57. Further, if I am entitled, sitting on appeal, to approach the application for relief completely afresh, then it does seem to me that I am also entitled to consider whether the application for relief was made promptly. For the reasons given by Mr Tucker, I accept that the application for relief was not made promptly. I accept that Mr Boyd did not know until 28th November that the form H had been faxed to the court out of time, but, as Mr Tucker submitted, the relevant individuals at the claimant’s solicitors must have known on Friday 11th October, when they had faxed the form H through to the court after 4.00 pm. Therefore an application for relief should have been made much sooner than 21st November; and the true basis for that application should have been made clear much earlier than the date of Mr Boyd’s witness statement of 18th December.
58. In my judgment, all of that amounted to a lack of promptitude which, in itself, would have entitled the District Judge to have refused the application for relief from sanctions. Even if the lack of promptitude was not such a sufficient reason, I consider that the combination of two breaches of the same order, and the complete lack of any explanation for either of them, is sufficient to refuse the grant of relief from sanctions in the present case.
59. Since I have heard over two hours of argument, I clearly cannot say that this was an appeal that had no real prospect of success. I therefore give permission to appeal. But, for the reasons that I have given, I dismiss the appeal.”
In summary:
- cumulative defaults are relevant.
- a short amount of time for the breach does not render it necessarily trivial.
- applications for relief from sanctions should be made promptly. The date runs from the date of the breach and not the date of realisation.
- there normally has to be an explanation for any breach, however short.
Medical Supplies and Services Ltd v Acies & Gosling [2014] EWHC 1032 (QB)
The claimant failed to comply with a peremptory order for disclosure, and
that failure to comply with the peremptory order was not trivial.
The breach caused prejudice to the opposing party and was not trivial in accordance with Mitchell.
Cook v Danter [2014] (unreported)
The claimant failed to file an updated schedule of loss or inform the court that she intended to rely on the original schedule.
The outcome:
The failure to inform the court of the decision to rely on the original schedule was trivial.
There was no prejudice to the defendants and striking out the claim for failing to confirm the original schedule was disproportionate sanction having regard to the breach.
The claim arises out of an alleged tripping accident at a car park in September 2009. Proceedings were issued in May 2012 with the Claimant serving a schedule of loss (totalling under £600) dated August 2011. There were multiple Defendants because of a dispute as to responsibility for the area where the accident occurred.
Following a telephone hearing on 2 September 2013, the Court made an Order in the following terms:
“Upon it appearing to the Court that there has been almost total disregard for the timetable previously set:
5(a) By 4pm on 6 January 2014 the Claimant must send an up to date schedule of loss to the other parties;
- Given the failure to comply with previous directions if any party fails to comply with the directions above within 7 days of the prescribed date their claim/defence shall be struck out without further order.”
The Claimant failed to file an updated schedule of loss or to confirm that she intended to rely on the original schedule.
On 14 January 2014 the defendants wrote to the Court seeking judgment on the basis that the claim had been struck out automatically for non-compliance with para. 5(a) of the Order.
On 15 January 2014 the Claimant’s solicitors wrote to the Court saying that she did not intend to file an updated schedule of loss, that she wished to rely on the original schedule and thereby sought to dispense with the requirement in the Order for an updated schedule.
On 16 January 2014 the Claimant applied to vary the Order at para. 5(a) to remove the need for an updated schedule and to seek relief from any sanction for non-compliance.
The Defendants subsequently filed counter schedules in response to the schedule, all parties filed PTCs and the matter was due to be listed in a trial window in March 2014 if relief was given.
On 8 February 2014 at a telephone hearing, the District Judge refused the Claimant’s application under CPR 3.9 and held the claim struck out on the basis that:
(a) the Order was in clear and unambiguous terms which required an updated schedule of loss to be filed;
(b) that schedules of loss were important documents and the Defendants were entitled to know the case against them;
(c) that compliance with the Order was not difficult;
(d) that the Claimant’s solicitor could have applied to vary or extend time in the Order prior to the date for compliance but did not do so; and
(e) that Court Orders giving parties a final chance were just that.
He held that the breach was not trivial and that relief should be refused.
The Claimant appealed. The Defendants opposed the appeal on the basis that the refusal of relief was an exercise of discretion that could not be interfered with and that it was nevertheless appropriate for relief to be refused given the nature of the Order breached in accordance with Mitchell.
HHJ Pearce-Higgins QC allowed the Claimant’s appeal on the following grounds:
(1) In considering whether the breach was trivial for Mitchell purposes, the Court had to consider the nature and effect of the breach on the parties and the Court. He approved the comments by Hamblen J at para. 18 of the decision in Lakatamia Shipping that:
“The Claimant submits that the non-compliance cannot be characterised as trivial in light of the history of earlier defaults by the Defendants. However, what matters is whether the non-compliance which resulted in the sanction is trivial and in my judgment that involves a consideration of the default in question, not other defaults at other times. The history of default may be a relevant general circumstance to take into account but it does not affect the characterisation of the relevant non-compliance or metamorphose a trivial default into a serious default.”
(2) That, although not of primary relevance, the question of whether the sanction imposed was a proportionate response to the breach committed was a relevant factor in dealing with the application justly;
(3) That, by focussing on the nature of the Order breached, rather than the nature and effect of the breach itself, and by failing to consider proportionality at all, the District Judge failed to take into account relevant considerations and thereby fell into error, enabling the Appeal Court to consider the matter;
(4) That the breach itself was trivial in that all the Claimant had failed to do was to confirm that she wished to rely on her original schedule by 13 January 2014 and there was no prejudice to the Defendants in finding out 2 days later than they should have done that the original schedule was being relied upon. The fact that the Defendants were in fact able to file counter schedules by 20 January 2014 reaffirmed this;
(5) That even if the breach was not trivial, relief should nevertheless be granted because this was a simple error by the Claimant’s solicitor in failing to write confirmatory letters that did not change the case that the Defendants were asked to meet and did not prejudice the trial window;
(6) That the striking out of a claim for failing to confirm that the original schedule was not to be updated was a disproportionate sanction having regard to the breach;
(7) That the parties would have been able to proceed to trial in the original trial window if relief had been given.”
Clarke v Barclays Bank [2014] EWHC 505 (Ch)
The claimant failed to inform the court or the defendant that their expert had retired despite knowing this when case management directions were made. They only informed the defendant 3 months before the trial.
The outcome:
The failure to inform the court and defendant of the need to instruct a new expert late in the day was not trivial.
Lakatamia Shipping Co Ltd v Nobu Su [2014] EWHC 275
The defendant failed to give disclosure in accordance with a court order and the commercial court guide (which says the latest time for compliance is 4.30pm on the day in question). The defendant provided disclosure at 5.16pm (46 minutes late).
The outcome:
The breach was trivial.
McTear v Englehard [2014] EWHC 722 (Ch)
The defendant served its witness statements 55 minutes late. There were 700 pages of documents exhibited to the statement, some of which had not been disclosed previously. The defendant subsequently served a supplemental list of documents. The defendant then made an application to extend time for service of the statement and for permission to serve a supplemental list of documents.
The outcome:
The fact that the witness statement was served 55 minutes late was trivial by itself. However considering the entire circumstances the defendant’s breaches and actions were not trivial and relief was not granted.
Chartwell Estate Agents Ltd v Fergies Properties SA and Anor [2014] EWCA Civ 506
During the proceedings the claimant requested further disclosure from the defendant in order to enable them to draft their witness statements. The defendant failed to disclose the documents requested and the claimant subsequently failed to serve their witness statements. Several weeks after the deadline for service, the claimant made an application to extend the time for service of the witness statements.
The outcome:
The claimant’s default was not trivial, although relief was granted due to the particular circumstances of the case.
Wain v Gloucestershire CC [2014] EWHC 1274 (TCC)
One of the defendants served a costs budget a day late.
A costs budget served one day late was trivial. Relief from sanctions was granted.
IN-TIME APPLICATIONS
There is a significant difference in the treatment of applications made before the date due for compliance as compared with ones made after, and therefore If you cannot comply with a court order, direction or rule then apply in advance of the deadline for an extension of time.
Indeed the principle has now been recognized by Parliament in The Civil Procedure (Amendment No. 5) Rules 2014, where the provision for the parties to agree, without the permission of the court, a 28 day extension provided that it does not put at risk the hearing date, only applies to an agreement entered into before the time limit applies.
In Kaneria v Kaneria [2014] EWHC 1165 (Ch)
the court recognized that there was no logic in this approach but found that there were sound policy reasons for it, holding that relief from sanctions is not required when an application is made before time has expired. Consequently Mitchell has no relevance and the principles in Robert v Momentum Services [2003] EWCA Civ 229 continue to apply.
“31…….of course if time is due to expire on 14 February, there is little practical difference between an application made on 13 February (or 11 February as in this case) and one made on 15 February. Realistically it is unlikely that an application made on 11 February could be heard before 14 February, and even if the court could in theory hear it immediately, it would no doubt usually already be too late for the applicant to comply with the original time limit: that is after all why the application is made”.
One can see the strict logic of saying that in such a case the realistic position is that unless an extension is granted the applicant is inevitably going to fail to comply with the time limit and should be treated in the same way as the one who has already failed to do so.
32. But this is not the approach that has been adopted as a matter of precedent, and I can see sound practical and policy reasons for not doing so. So far as precedent is concerned, in Robert v Momentum Services Ltd [2003] EWCA Civ 299 (“Robert”) the Court of Appeal expressly held that as in-time application for an extension of time be treated as an application for relief from sanctions”.
Here the court quoted, with approval, the judgment of Turner J in
Kagalovsky v Balmore Invest Ltd [2014] EWHC 198 (QB)
“There is no reason to doubt that the ratio of this decision [ie Robert] remains good law but the emphasis which Dyson LJ (as he then was) placed in that case upon the importance of the ingredient of prejudice occasioned by the delay in the exercise of the court’s discretion must now be seen in the light of the Jackson reforms. Furthermore the overriding objective applied in Robert has now been reformulated to include consideration calculated to achieve the enforcement of compliance with rules, practice directions and orders”.
The court here went on to say:
“37. Unlike the new CPR r 3.9 however, it can be seen that the reformulated overriding objective does not give the same prominence to the considerations set out in the new sub-paragraph (f). The guidance given by the Court of Appeal in Mitchell as to the effect of these matters being singled out for specific mention (namely that they should be regarded as “of paramount importance” and “given great weight” (See paragraph 26 above) therefore does not, it seems to me, apply. They are doubtless important considerations but they do not have the same paramount status”.
The judge reviewed the post-Mitchell cases and said:
“The consistent message from these authorities is that a party who needs more time for a procedural step in existing proceedings should not just ignore the problem but should ask the other side for consent, and if consent is not forthcoming, should make an in-time application for an extension; and conversely that the other side should respond positively and in a spirit of co-operation to reasonable requests for consent rather than “cry foul” and seek to take opportunistic advantage of the other party’s difficulties”.
At paragraphs 52-56 of the judgment the Judge made the point that the Mitchell principles were likely to waste, not save, court time.
52. Leggatt J made another point in Summit which is that to apply the Mitchell guidelines indiscriminately to all applications to the Court risks blurring useful distinctions between different kinds of order. In that case, the order for security for costs provided for a stay if the security were not provided but it was not an “unless” order. Leggatt J said that there was a significant difference between an order that provided for a stay on failure to provide security (which he accepted was a “sanction” within the meaning of CPR r 3.9), and an unless order that provided for the claim to be struck out unless security was provided: see at [31]. To apply the Mitchell guidelines in precisely the same way to both cases would be to “collapse the important distinction” between those two different kinds of order: see at [34].
53. If this is the case when considering two different forms of order imposing sanctions of differing seriousness, then in my judgment it is even more clearly the case when considering a form of order such as that made here by Mr Rosen which contains no sanction of any kind. As Mr Harty aptly put it, to apply the Mitchell guidelines to an in-time application such as in the present case would in effect erode the distinction between an ordinary order directing a timetable and an unless order, and turn every order specifying a time for taking a step into an unless order. I do not see any reason to suppose – and as I read Mitchell, there is nothing there to suggest – that this was the intention of the changes to the rules brought about by the Jackson reforms. It would run the risk that ordinary orders setting out timetables would indeed become “trip wires”, which is not the intention of the Jackson reforms: see the 18th implementation lecture by Lord Dyson MR at para 26 (cited and endorsed in Mitchell at [38]-[39]).
54. Rather the policy, as I understand it, is one of requiring parties to take orders seriously. As Mr Harty put it, the addition of sub-paragraph (f) to the overriding objective is about respect for rules and orders: it is intended to promote a culture of compliance rather than what Andrew Smith J described in AEI as “indifference to compliance”. But making an in-time application for an extension where necessary is respecting the rules: it is recognising that unless such an application is made, the party will be in default and treating this with the seriousness that it requires. It is not the same as indifference to compliance, or non-compliance.
55. So far as practicalities are concerned, it is not difficult to see that if the Mitchell guidelines apply to in-time applications, there is a risk in every case that a request for an extension, however unobjectionable in itself, may be declined by the other party in the hope of persuading the Court to refuse an extension and thereby gain a significant advantage: see the comments of Henderson J in Smailes at the end of [54], and of Leggatt J in Summit at [53]-[54].
56. My experience in the present case has been the same. As the facts show, a request for an extension was first made by CF to AR on 29 January (and by Hasu on 30 January), and repeated on 5 February, but not replied to by AR until 10 February. Had AR agreed to the request, it would not have cost either side anything (save for the cost of a few letters), and would have had no practical impact on the orderly progression of the proceedings to trial, the CMC having been fixed for mid-June 2014 and the trial itself for March 2015. Nor would it have been necessary to trouble the Court, so it would have had no impact at all on other court users. Even if AR had not consented but required an application to be made, a short unopposed application to the Registrar could have been dealt with without significant disruption to other court users (or substantial cost to the parties). This is in complete contrast to Mitchell where the effect of the default was not only to cause the initial hearing to be abortive, but to require the Court to vacate a half day appointment in order to hear the application for relief, time which had been allocated to deal with claimants who had been affected by asbestos-related diseases: see at [39].”
The Judge recognized that the prize for a party who succeeded in Mitchelling the other side could be enormous which would inevitably lead to technical points being taken. In an open attack on the logic of Mitchell the Judge said:
“61. I would myself have thought that similar considerations are likely to apply in any case where the effect of refusing an extension would be to leave a party either without a pleaded case or the evidence needed to prove it. If the Mitchell guidelines are applicable, even in a slightly watered down version, to an in-time application for an extension, there are likely to be more cases where an extension is refused, or at least where the other party thinks there is a real chance of persuading the Court to do so. In Mitchell the Court of Appeal expressed the view (at [48]) that once it was well understood that the Courts will adopt a firm line on enforcement, litigation would be conducted in a more disciplined way and there should be fewer applications under CPR r 3.9. It is not for me to question that view, and in any event I would be bound to follow the Mitchell guidelines in an application for relief under r 3.9, whatever the practical consequences. But it does not follow that the same is true of applying the Mitchell guidelines to an in-time application under CPR r 3.1(2)(a), and for the reasons I have attempted to give, it seems to me that there is a risk that doing so would mean that instead of parties adopting an attitude of reasonable co-operation in an attempt to make litigation run smoothly, there will be a culture of aggressive non-cooperation which may lead to more, longer and more expensive opposed applications”.
The Judge here regarded the penalty of losing the ability to defend the claim as “a wholly disproportionate penalty to impose”.
Summary
Mitchell has no relevance to “in time” applications.
“In time” applications are subject to the new overriding objective.
The court must consider the entire overriding objective.
The principle set out in 1.1(2)(f) as to ensuring compliance must be considered, but they are not an overwhelming or dominant factor in relation to an in time applications.
A party applying for an extension must justify that application to the court.
This means that it may be crucial when the application was deemed to have been made. Consequently issues will arise as to the date and form of an application as an application in time but not in correct form may be deemed to be out of time.
In Robert v Momentum Services [2003] EWCA Civ 229
the Court of Appeal held that where an application was made in time CPR 3.9 has no relevance; the application must be considered under CPR 3.1(2) which has no checklist.
“It is notable that Rule 3.1(2)(a) contains no list of criteria for the exercise of the discretion to grant an extension of time. In this respect it is to be contrasted with Rule 7.6 (applications for extensions of time for service of the claim form after the end of the period specified by Rule 7.5 or court order), and Rule 3.9 (application for relief from sanctions). I have no doubt that this was quite deliberate……”
The court distinguished the case of
Sagers v Clarke Waller (a firm) [2002] 1 WLR 3095
where the application was made out of time.
CPR 23.5 reads:
“Time when an application is made
23.5 Where an application must be made within a specified time, it is so made if the application notice is received by the court within that time”.
Thus it is the date of receipt and not the date of issue that is the key, and this may lead to problems in proving the date of receipt, especially where the application is made by post.
An action issued without the correct fee is not validly issued – see Page v Hewetts. There appears to be no case Iaw on the same point in relation to applications.
CPR 23 should be read carefully. Key points:
23.3(1) – general rule that an applicant must file an application notice;
23.3(2) – requirement to file an application notice can be dispensed with;
23.4 – requirement for service of an application notice;
23.6 – what an application notice must include;
23.7 – service of the application notice.
Practice Direction 23A sets out further information that an application notice must contain in addition to the matters in CPR 23.6.
Obviously it makes sense to agree realistic timetables in the first place, a point recognized by Jackson LJ in his report.
“First, the courts should set realistic timetables for cases and not impossibly tough timetables in order to given an impression of firmness”.
COSTS BUDGETING – HIGH COURT ALLOWS RELIEF
In Creed v Glademoor Limited and Wise, Chancery Division, 11 December 2013, unreported
Master Bragge allowed two applications for relief from sanctions in relation to failure to file and serve a costs budget on time.
In relation to a costs budget that was two days late the court found that this easily satisfied the triviality test in Mitchell and summarily granted relief.
In relation to a 26 day delay due to oversight and pressure of work, the court held that this was not trivial and therefore there would have to be a more thorough consideration.
Having conducted that investigation the court here found that the breach caused no prejudice save for the need to attend the relief hearing, which could be dealt with in costs.
Consequently relief was granted.
The court suggested that clearly trivial slips be raised informally at the Costs Management Conference and in relation to more serious defaults and/or where there is prejudice, there should be a formal application for relief from sanctions, supported by evidence.
This case differed from Mitchell in that there was still time for the parties to negotiate and seek agreement and avoid the need for a Costs Management Conference, or be able to proceed with the Costs Management Conference.
If, as in Mitchell, the budget deadline is just seven days before the Costs Management Conference then even a minor slip is likely to be refused relief from sanctions.
PLEADINGS
HIGH COURT DECLINES TO FOLLOW MITCHELL
In Adlington and 133 others v ELS International Lawyers LLP, unreported 12 December 2013, Claim No 2BM90107
His Honour Judge Oliver-Jones QC, sitting as a Judge of the Queen’s Bench Division of the High Court, granted relief from sanctions in a case “involving a clear failure to comply with the requirements of an Unless Order”. The failure related to the late service of individual Particulars of Claim.
In the first post-Mitchell decision at this level the Judge commented (paragraph 34):
“it might be argued that I have not had sufficient or proper regard to (a) the “wide range of interests” identified by the Master of the Rolls in paragraph 51 of the judgment in Mitchell……. and/or (b) “the new more robust approach” referred to in paragraph 46 and outlined in the paragraphs which preceded it. I make it clear that I have not ignored these important principles nor focused exclusively, or even primarily, on doing justice between the parties in this individual case, although clearly I have had to consider the latter in the context of the former. I bear in mind that in reaching the conclusions he did in his Final Report, Sir Rupert Jackson rejected what he described as “the extreme course which was canvassed as one possibility in [the Preliminary Report]paragraph 43.4.21 or any approach of that nature” (my emphasis added), namely that non-compliance would no longer be tolerated save in “exceptional circumstances”. Thus the circumstances do not have to be exceptional to attract the granting of relief, but a decision as to whether or not relief should be granted does involve the “change of balance” implicit in the new wording of CPR 3.9. I have undertaken that balancing exercise and given great weight to the two factors identified expressly in the rule. However, bearing in mind that the relationship between justice and procedure has not changed so as to transform rules and rule compliance into trip wires, and “nor has it changed it by turning the rules and rule compliance into the mistress rather than the handmaid of justice”, I am satisfied that relief should be granted in all the circumstances of this case”. Reference to “my emphasis added” is by the Judge, not me.
This is a very carefully worded paragraph, paying full lip service to the Mitchell decision, but the sub-text is that Mitchell was wrongly decided. We have reached a fine state of affairs when a Judge has to make it clear that he has not “focused exclusively, or even primarily, on doing justice between the parties in this individual case” although in fact that is exactly, and rightly, what he has done.
It appears that the decision in
Abercrombie and Others v Aga Rangemaster Ltd [2013] EWCA Civ 1148 was not cited to the court here, but the language and outcome of this case follows the Abercrombie line rather than the Mitchell line.
In Karbhari and Karbhari v Ahmed[2013] EWHC 4042 (QB)
Mr Justice Turner refused the defendant leave to amend its defence and to serve an amended witness statement seven months late and on the second day of the period when the matter was listed for trial.
Here the defendant wished to alter fundamentally the basis of his defence and witness statement. The Judge, understandably, refused the application.
Relying on CPR 3.4(2) the Judge struck out the defence and gave judgment for the claimant.
CPR 3.4(2) provides
“(2) The court may strike out a statement of case if it appears to the court –
(a) that the statement of case discloses no reasonable grounds for bringing or defending the claim;
(b) that the statement of case is an abuse of the court’s process or is otherwise likely to obstruct the just disposal of the proceedings; or
(c) that there has been a failure to comply with a rule, practice direction or court order”.
CPR 2.3(1) provides that a statement of case incudes a defence.
This decision is likely to have been made on these facts pre-Jackson.
The Revenge of Mr Justice Andrew Smith
In Mitchell v New Group Newspapers Ltd[2013] EWCA Civ 1537
the Court of Appeal criticized Mr Justice Andrew Smith for his decision (correct decision in my view) in
Raayan al Iraq Co Ltd v Trans Victory Marine Inc [2013] EWHC 2696 (Comm)
even though that decision was not under appeal and involved allowing relief from sanctions in relation to an extension of just two days for service of particulars of claim.
Mr Justice Andrew Smith obviously decided that revenge is a dish best eaten cold and has served it up in his remarkable comments in
Associated Electrical Industries Limited v Alstom UK [2014] EWHC 430 (Comm), 24 February 2014
Here the Judge refused to grant relief from sanctions, on the basis that he was bound to follow the Court of Appeal’s decision in Mitchell.
Here are some selected quotes from the Judgment:
“………….nothing in the judgments of the Court of Appeal in Mitchell or subsequent cases means that the court should disregard justice between the parties altogether”. (My italics).
ie it is now the law to more or less disregard justice, but not altogether (paragraph 43).
“[Solicitors] were given the explanation that the “Commercial Court was very busy “. I understand that it is provoking for solicitors that the court service should so explain non-compliance with the CPR when the Court of Appeal has said that they, financial pressures notwithstanding, can seldom do so: Mitchell.” (Paragraph 5).
The Judge, referring to failures of the court in this case and sarcastically paraphrasing Mitchell said:-
“Regrettably the court did not deploy resources to inform it when the acknowledgment of service was received.”
Paragraphs 47 to 49 inclusive are a sustained and brilliant attack on the Mitchelldecision, made all the more cutting by the Judge then following that decision “against my conclusion that as between the parties it is a disproportionate response and unjust to refuse an extension and strike out the claim form”.
What the Judge is saying here, in unambiguous language, is that the Court of Appeal has forced him to be “disproportionate” – nice twist on a key Jackson word, and “unjust”, resulting in the claimant, unjustly obviously, being struck out.
No Human Rights argument appears to have been considered.
In Raayan al Iraq the particulars were two days late; here they were 20 days late so, as the Judge says:
“………my decision in Raayan al Iraq was criticised by the Court of Appeal, and not only the observation to which specific reference was made in Mitchell. The result in this case seems to me to follow a fortiori”.
Here are paragraphs 47 to 49 in full:
47. One reason that dealing with a case in accordance with the overriding objective includes enforcing compliance with rules, practice directions and orders is to enable the courts’ resources to be shared fairly between litigants, and to prevent a defaulting party from using them excessively. As I have said, AEI’s non-compliance with the CPR did not have a significant impact on resources. However, there is a more general reason that the Court of Appeal has emphasised: it is considered that “once it is well understood that the courts will adopt a firm line on enforcement, litigation will be conducted in a more disciplined way and there should be fewer applications under CPR 3.9. In other words, once the new culture is accepted, there should be less satellite litigation, not more”: Mitchell (loc cit) at para 48, and see para 60. I must balance this against my conclusion that as between the parties it is a disproportionate response and unjust to refuse an extension and strike out the claim form. The emphasis that the Court of Appeal has given to enforcement of the CPR in order to encourage procedural discipline drives me to conclude that I should grant Alstom’s application and refuse that of AEI.
48. This conclusion is, I think, confirmed by what the Court of Appeal has said about the Raayan al Iraq case. As here, the non-compliance in that case did not attract an automatic sanction, and no significant court resources were used because of the breach. As here, the probable result of refusing the extension would have been satellite litigation and the amount in issue was relatively modest in relation to the costs that it would involve. However, Raayan al Iraq Co Ltd was, I think, in a stronger position than AEI: its particulars were only two days late; they were served late, as I concluded, because of an unfortunate oversight on the part of its solicitor despite his careful system for avoiding such errors, not because of indifference to compliance with the CPR; and the application for an extension of time was prompt. Nevertheless, as I said at para 28 above, my decision in Raayan al Iraq was criticised by the Court of Appeal, and not only the observation to which specific reference was made in Mitchell. The result in this case seems to me to follow a fortiori.
Conclusion
49. Therefore, despite my conclusion about fairness between the parties and what would be a proportionate response to the non-compliance, I allow Alstom’s application and refuse that of AEI.
The Judge pointedly says, referring to his earlier decision
“As here, the probable result of refusing the extension would have been satellite litigation and the amount in issue was relatively modest in relation to the costs that it would involve”.
In other words, well it does not really need any other words, Jackson-Mitchell is disproportionate, and unjust and self-defeating, resulting in greater costs that it saves.
Welcome to the club Mr Justice Andrew Smith.
The High Court Bench is now in open rebellion against Jackson-Mitchell.
This is a Daily Telegraph blog’s take on this decision (“Judges are not Administrators” – 26th February 2014)
“I will sign off by citing a judgment delivered by Mr Justice Andrew Smith (a very wise judge) a couple of days ago. He concluded that he was required to follow the Court of Appeal’s ruling that justice between the parties was now irrelevant. He struck out a claim because a document had been served late. But he explained that what he was required to do by the Court of Appeal was disproportionate and unfair. I wonder whether those silly Court of Appeal judges will be happy to go on reading more and more judgments like that one.”
Service of Pleadings
Mr Justice Stuart-Smith set aside an extension of time for serving the Claim Form, which extension had been obtained without notice to the other side. The effect was that the claim was struck out as it had not been served in time.
The court endorsed the statement in Hoddinott v Persimmon Homes (Wessex) Ltd [2008] 1 WLR 806 were the Court of Appeal said:
“Thus if a claimant applies for and obtains an extension of time for service of the claim form without giving notice to the defendant, he does so at his peril. He should know that an order obtained in such circumstances may be set aside. He can take no comfort from the fact that the court has made the order. He cannot be here subsequently to say that it was the court’s fault that the order was made”.
At paragraph 1 of the judgment the court said:
“Where a party issues protective proceedings hard up against the expiry of the limitation period, it is expected to pursue those proceedings promptly and effectively; and if it subsequently seeks and obtains orders extending time for the service of the Claim Form or Particulars of Claim without notice to the other party, it dices with procedural death. These simply propositions should be known to all professionals conducting litigation. They were established long before the recent reforms of the Civil Procedure Rules”.
Neither the fact that the provisions of the pre-action protocol had not yet been complied with nor the prospect that serving proceedings might lead to an increase in costs because of that non-compliance, were good reasons for failing to serve the Claim Form.
The court said:
“The court will expect the parties to have complied with any relevant pre-action protocol and will take any failure to do so into account where exercising its general powers of management, including its power to grant relief from sanctions under CPR 3.9”.
Considering all circumstances
In S C D G Petrol SRL v Vitol Broking Ltd and others, 9 December 2013, unreported
the Commercial Court refused relief from sanctions where a party had failed to provide security within the time specified, but said that it was still the duty of the court to have regard to all the circumstances of the case and the overriding objective and that
Sayers v Clarke and Walker [2002] EWCA Civ 645
decided before the April 2013 amendments to CPR 3.9(1), remained good law.
This decision has been taken as a suggestion that Mitchell was wrongly decided and in conflict with yet another existing Court of Appeal decision.
Serving by email
For reasons of confidentiality the full details of this case are withheld. Counsel supplied the information to me.
In a personal injury case of £7,000, with a substantial credit hire element, an unless order with the sanction of strike-out was made for the claimant to file and serve witness statements by 4.00pm on a specified post April 2013 date.
Unsigned statements were emailed to the defendant’s solicitors in advance of the date; the signed statements were emailed to the defendant’s solicitors close to 4.00pm on the deadline date.
The respective solicitors communicated regularly by email and the defendant solicitor did not take issue at the time concerning such service.
A week later the claimant’s solicitors received notice that the court had, of its own motion, struck out the claim as the claimant had failed to file the statements at court; the claimant’s solicitor insisted that they had been sent to the court by first class post.
The claimant applied for relief from sanctions and the defendant successfully argued that they had never been served with signed statements; the defendant did not accept service by email and so that service was ineffective.
– See CPR 6.20 and PD6A paragraph 4.1 and 4.2.
The court also found as a fact that the statements had not been filed at court.
Thus relief from sanctions was refused and the claim remained struck out.
Comment
This is a grossly unfair hard-line Mitchell decision. I do not know whether it is being appealed, but in the new climate following the clinical negligence 28 days extension by consent – introduced on 13 February 2014 – courts are likely to reach a different conclusion.
However the risk should not be taken. Unless there is express agreement to accept service by email the document is not served.
For an excellent and comprehensive analysis of the Practice Directions and problem areas in using email in litigation please see Gordon Exall’s piece http://civillitigationbrief.wordpress.com/2014/02/13/the-dangers-of-serving-by-e-mail-a-working-example/
The law should be changed immediately to provide that service by email is always good service and that consent is never needed. These antiquated rules and the antiquated behaviour of some firms of solicitors are what is bringing the law into disrepute, not some technical breach which harms no-one.
AMENDING PLEADINGS
In Groarke v Fontaine [2014] EWHC 1676 QB
the Oueen’s Bench Division of the High Court overturned the decision of a District Judge refusing a defendant permission to amend its defence in a road traffic accident case.
Although the court was able to distinguish Mitchell on the ground that there was no inconvenience caused to other court users, the decision is a full frontal attack on Mitchell.
Eady J held that the court was able to be flexible as amending its defence wasted no court resources and thus did not inconvenience other court users, and that the interests of fairness and justice did not need to be “compromised merely for the sake of discipline or the marking of disapproval”
“ I believe that justice and fairness required that the amendment should have been allowed so that the “real dispute” between the parties could be adjudicated upon.”
“the courts do not exist for the sake of discipline…”
“procedural rules should be the servant and not the master of the rule of law.”
“As the authorities make clear, it is a question of striking a fair balance. The factors relevant to doing so cannot be exhaustively listed since so much will depend on the facts in each case. However, they are likely to include:
(1) the history as regards the amendment and the explanation as to why it has been made late;
(2) the prejudice which will be caused to the applicant if the amendment is refused;
(3) the prejudice which will be caused to the resisting party if the amendment is allowed;
(4) whether the text of the amendment is satisfactory in terms of clarity and particularity.”
“ I must be careful to avoid discipline for discipline’s sake.”
Requiring the party in default to sue other solicitors in negligence “would hardly be conducive to the efficient administration of justice, the saving of costs, or the interests of other litigants.”
In Dany Lions Ltd v Bristol Cars Ltd [2014] EWHC (QB) 928
the Queen’s Bench Division of the High Court considered the relevance of the Mitchell principles in relation to applications to amend pleadings generally and in relation to late applications.
Here an application to amend was made several days before trial and was considered on the first day of the trial. The defendant argued that it showed that it had a strong case and that the claim was an abuse of process.
The court said that following
Swain-Mason and others v Mills and Reeve [2011] EWCA Civ 14
it is no longer sufficient to show that no prejudice, save as to costs, had been caused to the other party. In that case the Court of Appeal endorsed the pre-CPR Commercial Court case decision in
Worldwide Corporation Ltd v GPT Ltd
refusing late amendments which had been prompted not by discovery of new evidence but by newly instructed counsel taking a different view of the case, and holding that payment of costs may not be adequate compensation for a party which wished to have the matter resolved once and for all.
The onus on the amending party is a heavy one to show the strength of the new case and why justice to him, his opponent and other court users requires its pursuit.
The amended text must satisfy the full requirement of a proper pleading; it is not acceptable to say that deficiencies in the pleading can be made good by evidence or disclosure of further information.
Finally the court here considered Mitchell and said:
“7. One also has to look at the questions of late amendment in the light of the approach by the Court of Appeal in the more recent case of Mitchell v News Group [2013] EWCA Civ 1537 to defaults in compliance with the Rules. Again, I paraphrase: nowadays, a much stricter view is taken of non-compliance. It was said in that case that if departures are to be tolerated, then the relaxed approach to civil litigation which the Jackson reforms were intended to change will continue.”
SETTING ASIDE JUDGMENT
In Page v Champion Financial Ltd [2014] EWHC 1778 (QB)
the court set aside a default judgment despite a three month delay in making the application even though the court has to take into account whether the application was made “promptly”.
The judgment had been entered against the first defendant in circumstances where the fifth defendant could be liable to pay, but where the fifth defendant had argued that the judgment against the first defendant was not binding upon it.
“………I have concluded that, had I reached a different conclusion in relation to the question of principle and decided that the default judgment obtained against the First Defendant did preclude the Fifth Defendant from contending that the First Defendant did not act in breach of contract or negligently, I would have exercised my discretion to set aside the default judgment obtained against the First Defendant notwithstanding the three month delay which I consider there has been. I say this for a simple reason: I consider that the injustice which the Fifth Defendant would suffer were it to find itself bound by the default judgment would substantially outweigh the Fifth Defendant’s lack of promptness and the essentially tactical reason why an application to set aside was not made earlier than it was. In my judgment, it would be wholly unfair if the Fifth Defendant were unable to advance a case that the First Defendant was not negligent or in breach of contract because of a default judgment which, it must be remembered, was obtained through no fault of the Fifth Defendant. The Fifth Defendant was, on the present hypothesis, mistaken as to the effect of the default judgment and so as to the need to make an application. However, as demonstrated by the conclusion which I have, in fact, reached on the question of principle, the approach adopted by the Fifth Defendant in relation to that issue can hardly be described as untenable. Weighing these considerations in the balance, and bearing in mind the lack of prejudice suffered by the Claimant (in particular, Mr Burroughs’ point that nothing has happened in the proceedings since 7 February 2014, other than service of the Amended Defence and issue of the setting aside application itself) and the Claimant’s express acceptance that there is “some other good reason” why the default judgment should be set aside, had I decided the question of principle differently, I am clear that I would nevertheless have acceded to the Fifth Defendant’s application and set aside the default judgment”.
In Mid-East Sales Ltd v United Engineering and the Islamic Republic of Pakistan [2014] EWHC 1457
the Commercial Court, part of the High Court, considered to what extent the changes to the overriding objective and CPR 3.9 affect applications to have judgment set aside.
After a delay of several years the defendant challenged the proceedings on the grounds of absence of jurisdiction. The judge found that the Mitchell principles applied and thus the very long delay meant that the application would not be granted.
However the court did set aside the default judgment holding that applications under CPR 13.3 required a different approach to a case that fell within CPR 3.8 and where relief was required under CPR 3.9.
CPR 13.3 reads:
“(1) In any other case, the court may set aside or vary a judgment entered under Part 12 if
(a) the defendant has a real prospect of successfully defending the claim; or
(b) it appears to the court that there is some other good reason why –
(i) the judgment should be set aside or varied; or
(ii) the defendant should be allowed to defend the claim.”
Here the delay on this point was 5 ½ months and the court appears not to have specifically addressed CPR 13.3(2):
“(2) In considering whether to set aside or vary a judgment entered under Part 12, the matters to which the court must have regard include whether the person seeking to set aside the judgment made an application to do so promptly.”
However there is consideration of the case law on the need to act promptly and the court held that the CPR 3.9 criteria did not apply to applications to set aside judgment.
In Newland v Trading FZC and others [2014] EWHC 1986 (Comm) the Commercial Court – Mr Justice Males – held that CPR 3.9 applied to applications set under CPR 13.3 to set aside judgment.
The judge referred to
Samara v MBI and Partners UK Ltd [2014] EWHC 563 QB and
Mid-East Sales Ltd v United Engineering and Trading Company (PVT) Ltd [2014] EWHC 1457.
CPR 10.3 requires a defendant served with a claim form to file an acknowledgement of service within a specified period and CPR 10.2 provides, as a sanction, that if the defendant fails to do so then the claimant may enter judgment.
Mr Justice Males referred to the Mitchell judgment as going “round the English legal profession like wildfire” and said that it “has, to say the least, proved to be a controversial decision, but until it is reversed or modified by a higher court it is binding on first instance judges. The guidance which it contains has now been considered (I was told) in over 40 reserved judgments available on the internet. This, I suppose, will make one more”.
The court took in to account the fact that CPR 13.3 specifically allows a judgment to be set aside on conditions and that that was an important fact, allowing the court to deal with the matter in a proportionate way and that the “entry of a default judgment may operate as an extreme sanction”. “It remains the case that the sanction must be proportionate to the non-compliance and its consequences”.
The judgment was set aside, but on strict conditions involving payment of US$ 4.75 million for security for costs and payment of outstanding costs.
Referring to the three cases considered by the Court of Appeal in June 2014, Mr Justice Males said:
“There is, therefore, a risk that the legal framework by which I have determined this application may be, if not dismantled, at least reassembled in the near future”.
In Dalton v Cooper [2014] EWHC 1556 (QB) the Queen’s Bench Division of the High Court allowed an appeal against the decision of the Master and allowed relief from sanctions.
This was an asbestos claim brought by a widow and judgment had been entered in default of a defence being filed on time and the Master had refused to set aside judgment, holding that the defendant had no real prospect of defending the claim and that the application had not been made promptly.
On appeal the judge found that there was a real prospect of the defendant defending the claim, but upheld the Master’s finding that there had been a lack of promptness, but held that that did not debar the defendant from having the judgment set aside.
CPR 13.3(2) required the court to “have regard” to the promptness of the application to set aside; consequently a lack of promptness is not necessarily fatal.
Here the overturned Master was Master McCloud, who made the original Mitchell decision.
REINSTATEMENT
In Haley v Siddique [2014] EWHC 835 (Ch) the Chancery Division of the High Court considered the appropriate criteria for reinstatement when an action had been struck out of the court’s own motion.
The action had been stayed to allow mediation, which was largely successful. The parties were ordered to notify the court by 10 November 2013 as to whether further directions were needed. That order contained no specific sanction. The parties failed to notify the court which of its own motion made the following order:
“(1) The claim be struck out.
(2) Because this order has been made without a hearing, the parties have the right to apply to have the order set aside, varied or stayed. A party making such an application must send or deliver the application to the court (together with any appropriate fee) to arrive within seven days of service of the order”.
The claimant immediately applied for reinstatement and that application was neither supported nor opposed by the defendants. Applying Mitchell, the District Judge refused the application.
The High Court allowed the appeal as the District Judge had applied the wrong criteria. An application to vary a without notice order was fundamentally different to an application for relief from sanctions and thus was not subject to Mitchell or Tibbles (Tibbles v SIG plc [2012] EWCA Civ 518).
Two key Court of Appeal cases appear not to have been considered by the District Judge. In Tombstone v Raja [2008] EWCA Civ 1444
the Court of Appeal had this to say about exercising a discretion where a without notice order is concerned:
“They are determined by the court exercising the discretion given by that rule in accordance with the overriding objective. Whether the order is one which affects the rights of the affected party in an important respect (a judgment is the most obviously example), it will only be in the most exceptional circumstances that the discretion will not be exercised to set aside the order”. (Paragraph 84).
In Ryder plc v Dominic James Beever [2012] EWCA Civ 1737
the Court of Appeal was critical of a decision to make a striking out order with notice:
“I recognise of course that the court has the power to make an order of its own motion but, particularly where there is a possibility of a ‘strike-out unless’ order, it is far preferable for an application to be taken out, in which case notice of the application must be served on the opposing party. The saving of costs is not a good reason for adopting the informal process used in this case. True, costs would be incurred but the claimant would be ordered to pay them and almost certainly to pay them immediately. If, contrary to the view I have expressed, a court regards it desirable to make an ‘unless’ order without the issue of an application, the court should surely be slow to make such an order without giving the party affected the opportunity to be heard, as happened here. In short, I deprecate the practice followed here. The CPR are intended to make solicitors comply with orders or to face the consequences with their eyes open. They are not intended to create traps for the unwary or slightly incompetent. In my view, these circumstances are highly relevant to the exercise of the court’s discretion on the grant of relief”.
PEREMPTORY ORDERS
In Porter Capital Corporation v Zulfikar Masters, 19 March 2014
the court held that as it is now more difficult to obtain relief from sanctions courts should not make peremptory orders lightly.
After a contested hearing the claimant made an application for an interim payment pending the taking of an account. The claimant also sought an order that, in the event of a default in payment, it should be allowed to enter judgment for the whole amount claimed or, alternatively, the defendant should be debarred from defending the proceedings.
Deputy High Court Judge Strauss QC granted the Claimant an interim payment but refused to make a peremptory order. He made the following observations in relation to the approach of the courts following Mitchell:-
“4. In my view given the more stringent regime for obtaining relief from sanctions imposed by the amended provisions of CPR 3.9 (see Mitchell v News Group Newspapers Ltd 2013 EWCA Civ 1537), it is appropriate that the court should adopt a cautious approach to the making of orders with sanctions attached, unless of course the sanction is built into the rule, as in the case of the requirement for a costs budget which was in issue in Mitchell.
5. Since the sanctioned party may find it difficult to obtain relief from anything other than a trivial breach, the court should consider in advance whether the sanction will be a proportionate response to a breach of the order in all foreseeable circumstances. In particular, where the order requires the payment of money, as opposed to compliance with a procedural direction, a breach may not be deliberate or in any sense blameworthy, but due just to a lack of funds.”
He then went on to consider whether it would be appropriate to make the order.
“6. The order sought in this case is, in either form, wholly inappropriate for the following reasons:-
(a) there has been no prior default justifying a stringent order or any order other than the usual one;
(b) it is impossible to say in advance whether a default would be deliberate or otherwise blameworthy;
(c) the effect of the main order sought would be to give Porter judgment, automatically, for about 3 times the amount that I have found to be a reasonable proportion of its likely entitlement;
(d) the effect of the alternative order sought would probably be the same, as the court conducting the assessment would have no means, without Mr. Masters’ expert’s evidence, of finding any errors or excessive claims; and
(e) generally, the order sought, in either form, would be potentially unfair on a defendant’s other creditors if the reason for the default were insolvency since, in the event of bankruptcy, it might well give the claimant a greater share of his assets than its proper entitlement.”
He concluded:
“8. While the courts now adopt a more rigorous approach to compliance with their orders than formerly, this is still some distance from the ‘one strike and you’re out’ regime implied by the order sought in this case, which even in its milder form would in my view be inconsistent with access to justice principles and probably with ECHR article 6”
The making of a peremptory order on an a without notice application when the Court only heard one side of the argument was specifically deprecated by the Court of Appeal in Ryder Plc -v- Dominic James Beever [2012] EWCA Civ 1737. This was a consideration of the discretion being exercised under the old CPR 3.9. Smith L.J. observed that unless orders should rarely be made on an ex parte basis. Smith L.J. observed:-
“If, contrary to the view I have expressed, a court regards it desirable to make an ‘unless’ order without the issue of an application, the court should surely be slow to make such an order without giving the party affected the opportunity to be heard, as happened here. In short, I deprecate the practice followed here. The CPR are intended to make solicitors comply with orders or to face the consequences with their eyes open. They are not intended to create traps for the unwary or slightly incompetent.”
ADDITIONAL LIABILITIES
- FORM N251
In Harrison and Harrison v Black Horse Limited [2013] EWHC B28 (Costs)
the Senior Courts Costs Office, Master Gordon-Saker, refused the claimant relief from sanction in relation to non-service of Form N251 and thus the claimant was unable to recover any success fee in relation to either base costs or counsel’s fees.
These were complicated proceedings involving five County Courts, the High Court, The Court of Appeal and the Supreme Court with four conditional fee agreements being entered in to at various stages of the proceedings.
The non-service related to the conditional fee agreements in the High Court and the Court of Appeal, even though notice had been given in relation to the County Court proceedings.
Here the SCCO held that under the pre 1 April 2013 CPR 3.9 – the old test – “this would have been a borderline case for relief from sanctions” (paragraph 42). The court then listed the points in favour of granting relief from sanctions but said that “they now play second fiddle to the factors specifically listed in the new rule”. (paragraph 44).
However in
Burton v Cranfield Delta Whiskey Group, Senior Courts’ Costs Office, Master Rowles, 18 November 2013,
on almost identical facts relief from sanctions for the failure to file and serve a N251 at all was granted.
Consequently, the success fee is recoverable. Judgment was handed down on 20 December 2013 – after consideration of the Mitchell and Forstaterjudgments.
Here is a summary:-
- Matter listed for detailed assessment in February 2014, for a case which resolved at trial on 29 September 2012;
- Human error essentially found to be the cause of a failure to file and serve the N251; the Master accepted that this was not normally a sufficient reason under Mitchell for relief but said “it seems to me that the reasoning in Mitchell is very much aimed at human errors occurring after April 2013, rather than 15 months or so before”.
- Claimant’s solicitor’s internal system indicated N251 filed and served in January 2012 (when Claimant changed solicitors);
- No issue taken with Notice of Funding until Points of Dispute filed in February 2013;
- Claimant issued a precautionary application in October 2013, but first attempted to deal with the matter informally;
- No real prejudice to the Defendant (given Claimant was on a CFA with previous solicitors, and Defendant’s conduct made it plain that the matter would be contested to trial in any event);
- The error was the legal representative’s, not the Claimant’s;
- Once the Defendant made clear an application was required (October 2013), the Claimant acted promptly;
- The fact that the ‘non-compliance’ occurred 15 months before Jackson was a relevant factor; Master Rowley said that it “seems to me to be aimed at current and future practice, rather than being a stick to beat parties with for errors for which relief rightly or wrongly, would routinely have been granted had an application been made at the time”.
- Claimant’s position between February 2013 and October 2013 (that the N251 had been filed and served) was reasonable;
- The application would have been better-issued as a preliminary issue to the Detailed Assessment;
- No Order as to costs on the application.
My thanks to Shaman Kapoor of Temple Garden Chambers who obtained relief in this matter for this report.
There must be some doubt as to the correctness of this decision. The transitional provision determines that the date of the application, not the date of the breach determines whether the new or old rules apply:
“The amendments made by……these Rules do not apply to applications made before 1 April 2013 for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order”.
What may have happened here is that the judge, like many others, was disturbed by the ultra hard line Mitchell approach and found a not entirely convincing method of distinguishing this case from Mitchell.
Harrison or Burton – take your pick.
Mitchell or Abercrombie – take your pick.
In Forstater v Python (Monty) Pictures Ltd [2013] EWHC 3759 (Ch)
Mr Justice Norris sitting in the Chancery Division of the High Court granted relief from sanctions when notice of acting under a conditional fee agreement had been given in a letter rather than in the prescribed Form N251, but relief was granted only from the date of the letter.
Thus the success fee was not recoverable in relation to work done prior to the letter. That accords with pre 1 April 2013 practice.
- REASONS FOR SUCCESS FEE
In Long v Value Properties Limited and Another, Senior Courts Costs Office, Case No JR1306057
Master Rowley refused relief from sanctions where the successful claimant’s solicitors, acting under a conditional fee agreement, failed in detailed assessment proceedings to serve a statement of reasons or other information as required by Section 32.5 of the Costs Practice Direction.
Failure to provide information in accordance with Section 32.5 of the Costs Practice Direction results in the sanction of being unable to recover an additional liability, that is a success fee or after-the-event insurance premium. This sanction is imposed by CPR 44.3B.
Here the chronology of the detailed assessment proceedings was:
17 October 2013 – Notice of Commencement and Bill of Costs served
5 November 2013 – Second Defendant requests extension of time for serving Points of Dispute (otherwise due on 7 November)
6 November 2013 – Claimant agrees extension of time with both Defendants until 15 November
14 November 2013 – Points of Dispute served by both Defendants
20 November 2013 – Claimant sends letter enclosing Conditional Fee Agreement and other documents; proposes Amended Points of Dispute if required
25 November 2013– First Defendant indicates it will wait to see Replies before deciding on whether to serve Amended Points of Dispute.
27 November 2013– Claimant serves Replies
29 November 2013– Claimant issues application for relief from sanctions
Master Rowley has been heavily criticized for what appears to be an extreme position. My view is that it is the inevitable consequence of the Mitchell decision, my only criticism of Master Rowley is that he could have followed the Abercrombie decision of the Court of Appeal and reached the opposite conclusion. It is not clear that Abercrombie was cited to him.
In paragraph 39 Master Rowley says that he cannot “realistically follow a different approach based on one High Court decision “which strongly suggests that he, and indeed the advocates, was unaware that there was a Court of Appeal decision that he could have followed and which takes a different view from Mitchell.
The inflexible and draconian approach forced upon a clearly unhappy Master Rowley is best set out in his own words at paragraph 34 to 39 of the judgment:
34. “This “one strike and you’re out” issue troubled me throughout this hearing. The Court of Appeal at paragraphs 34 and 35 in Mitchell expressly refer to Sir Rupert Jackson’s conclusion in his report that the “extreme” approach of non-compliance always suffering a sanction save in exceptional circumstances was not one to be followed. Nevertheless, this is the logical outcome of the paying parties’ position in this case. My experience of these applications is that they almost invariably involve an oversight of one form or another and as such is very unlikely to be rectified before it is brought to the receiving party’s attention by the Points of Dispute.
35. The position is made all the more stark by the nature of the sanction imposed. Where a Notice of Funding is not served for a period of time, the success fee is disallowed for that period of time but is recoverable once the requisite Notice has been served. If no Notice is ever served, then clearly the entire Success Fee is at risk. But there is at least an escape route of sorts for a party who overlooks serving the relevant notice immediately and then rectifies his error. The sanction for a failure to provide information at the commencement of Detailed Assessment proceedings however has no similar provision for late notice and as such it is all or nothing. That seems strange to me given that the complete absence of knowledge to the opponent caused by a failure to serve the N251 always seems to cause more prejudice than a failure to serve information regarding a CFA whose existence was already known. An opponent at this second stage could always “pick up the phone” but an opponent at the first stage would simply have no clue about the additional liability being accrued and subsequently being sought.
36. It did occur to me that the Claimant’s non-compliance was potentially a trivial one. The period of any prejudice (and I was not convinced that there was much prejudice during this time) lasted no more than three weeks and it was in the hands of the Defendants to bring that period to an end should they have wanted to do so. The error was rectified promptly and the application made extremely quickly.
37. But the non-compliance is not of the sort suggested by Mitchell as being trivial – for example a matter of form over substance – and Mr Power’s concession on this point seemed to me to be a telling indication of the parties’ views as to whether the lack of provision of this information could be considered trivial.
38. In these circumstances, the Claimant has to persuade me that there is a good reason for the non-compliance and it is clear that oversight, or human error, is no longer to be regarded as a good reason. Based on the Mitchell guidance, I must refuse relief from sanction.
39. The decision in Mitchell is clearly the Court of Appeal’s opportunity to turn Sir Rupert Jackson’s extra-court pronouncements into judicial precedent. The Court’s decision in Durrant reinforces that position. I do not think I can realistically follow a different approach based on one High Court decision, as Mr Power encouraged me to do, even if I considered that to be the appropriate course. Furthermore, even if is being appealed, and I have no information that, the case of Durrant makes it clear that the Court of Appeal’s general view is clear on applications of this sort. Therefore, while I may have qualms about the nature of the sanction imposed for a breach of this particular provision of the CPR, I am clear that I need to take that as being the correct sanction and simply concentrate on whether the breach was trivial and if not whether there is a good reason for granting relief. Both of those questions are to be answered in the negative in this case”.
Where will this all end?
WITNESS STATEMENTS
The sanction is set out in CPR 32.10.
“32.10 Consequences of failure to serve witness statement or summary
If a witness statement or a witness summary for use at trial is not served in respect of an intended witness within the time specified by the court, then the witness may not be called to give oral evidence unless the court gives permission”.
In Lloyd v PPC International Limited [2014] EWHC 41 (QB)
Mr Justice Turner said that an application for relief from sanctions where a claimant had failed to serve witness statements on certain issues as ordered by the court, nearly three months having passed since the court deadline, had no realistic prospect of success.
As the judge pointed out……”Indeed, one possible interpretation of CPR 32.10 is that the party in default is not permitted to call the intended witness to give oral evidence on any matter unless the court gives permission even if the witness statement not served in time is intended to relate only to a distinct part of the evidence relied upon and his other evidence is contained within other witness statements which have been served in time”.
Thus if a witness fails to serve a subsequent statement dealing with, for example, a very small element of special damages the whole of his or her evidence may be excluded, even if all the other evidence was served on time.
The court said that post-Mitchell “the courts have taken a consistently robust approach to the late service of witness statements (see Durrant v Chief Constable of Avon and Somerset Constabulary [2013] EWCA Civ 1624 and Karbhari v Ahmed [2013] EWHC 4042 (QB)).
The decision here is hardly surprising and would not have been surprising pre-Mitchell/Jackson; as the Judge said in the first words of the judgment:
“This case provides yet another example of a litigant treating an order of the court as if compliance were an optional indulgence”.
What is interesting about this case is that it was actually the defendant’s consent application to vary the court timetable as it had concerns about its ability to comply with its own obligations to file evidence “in response” to the claimant’s evidence.
As the court pointed out there was nothing for it to respond to as the claimant had not filed the relevant evidence.
What the court did of its own motion, is to debar the claimant from raising any issue at trial in relation to the subject-matter of the unserved evidence.
It also rejected the notion of a consent order in such circumstances. CPR 3.8(3) provides:
“Where a rule, practice direction or court order –
(a) requires a party to do something within a specified time; and
(b) specifies the consequences of failure to comply,
the time for doing the act in question may not be extended by agreement between the parties.
At paragraph 27 the court said:
“27. CPR 32.10 specifies the consequences of failure to serve a witness statement. It follows that even if the parties had purported to reach a concluded agreement on an extension of time this would not have been effective unless the court were to be persuaded formally to endorse it. This court is under a duty under CPR 1.4 not simply to adjudicate passively upon the applications of the parties or to rubber stamp their reciprocal procedural indulgences but actively to manage cases. To this end, the court has power under CPR 3.3 to make orders of its own initiative”.
In Monde Petroleum SA v Westernzagras Ltd [2014] QBD (Comm) 19 May 2014
Hamblen J, sitting in the Commercial Court allowed relief from sanctions where the claimant deliberately failed to serve a witness statement on time.
Here the claimant filed a witness statement three months late so as to save costs as related arbitration proceedings were under way and the claimant believed that it would not be proper to incur the costs of submitting large volume of evidence given the significant overlap between the court case and the arbitration proceedings.
Allowing relief from sanctions the court held:-
- the breach was not trivial, even though the evidence was not of great significance;
- the claimant’s decision had to a certain extent been justified in that the proceedings had been stayed pending publication of the arbitration award and thus the claimant had not needed to provide a full witness statement;
- the Claimant had shown good reason for the court to grant an extension of time to serve the statement; it was just and appropriate to grant relief from sanctions.
In Boyle v Commissioner of Police for the Metropolis [2013] EWCA Civ 1477
the Court of Appeal upheld the trial judge’s decision to refuse to admit expert evidence served one working day before the commencement of the trial, and “reluctantly” dismissed the appeal. The effect was that the catastrophically injured claimant received nothing.
The Court of Appeal said that the application “was effectively an application for relief from the sanction of being unable to call expert evidence which had not previously been served”.
The significance of the decision is in the Court of Appeal’s statement at paragraph 11:
“11. There is the further important consideration that, as must now be well known, the courts are becoming less and less tolerant of failure to serve expert evidence in accordance with previous orders of the court, just as they are becoming less and less tolerant of other breaches of court orders. It is not merely prejudice to the parties that matters. There is prejudice to the system of justice as a whole and, in particular, to waiting litigants if their cases are to be deferred because of delays in litigation currently before the court. We were referred to a case in the early days of the Civil Procedure Rules, in which this court, albeit in a case where the expert evidence sought to be relied on was on an extremely narrow point, said that the whole thrust of the CPR regime is to require the parties to behave reasonably towards each other in the conduct of litigation and that the old culture, which used to drag personal injuries cases out, should now be at an end, see Baron v Lovell [2000] PIQR 20 at 27 per Brooke LJ. This has been emphasised over and again in subsequent decisions, two of which, as it happens, Fred Perry Holdings Ltd v Brands Trading Plaza Ltd [2012] EWCA Civ 224 and Mannion v Ginty [2012] EWCA Civ 1667, are referred to in the notes to rule 3.9 in the current supplement of the White Book. As the judge in this case said, any court is reluctant to see a catastrophically injured claimant go uncompensated, but there has to be a clear message that prolonged and persistent failures to comply with court orders may well result in cases being dismissed”.
In Chambers v Buckinghamshire Healthcare NHS Trust Case No HQ12X04892 – Master Cook, sitting in the Queen’s Bench Division of the High Court, refused the defendant relief from sanctions in relation to late service of expert evidence, even though the trial date was not affected and accepted that “Failure to comply with rules, practice directions and orders can attract draconian consequences. That is the raison d’être for the get-tough approach”.
The Master also accepted that the “result may appear to an observer to be unjust”.
Here there was no unless order and no final order and minimal, if any, prejudice to the claimant and no automatic sanction, although the order had previously been extended by the court three times.
The application was made one month after the expiry of the deadline.
In Karbhari and Karbhari v Ahmed[2013] EWHC 4042 (QB)
Mr Justice Turner refused the defendant leave to amend its defence and to serve an amended witness statement seven months late and on the second day of the period when the matter was listed for trial.
Here the defendant wished to alter fundamentally the basis of his defence and witness statement. The Judge, understandably, refused the application.
Relying on CPR 3.4(2) the Judge struck out the defence and gave judgment for the claimant.
CPR 3.4(2) provides
“(2) The court may strike out a statement of case if it appears to the court –
(d) that the statement of case discloses no reasonable grounds for bringing or defending the claim;
(e) that the statement of case is an abuse of the court’s process or is otherwise likely to obstruct the just disposal of the proceedings; or
(f) that there has been a failure to comply with a rule, practice direction or court order”.
CPR 2.3(1) provides that a statement of case incudes a defence.
This decision is likely to have been made on these facts pre-Jackson.
In Chartwell Estate Agents v Fergies Properties Ltd, High Court, Queen’s Bench Division, 18 February 2014
Mr Justice Globe had allowed relief from sanctions following late service of witness statements, and the Court of Appeal has dismissed the defendant’s appeal against that decision. The Court of Appeal consisted of three different judges to those in Mitchell, namely Laws Sullivan and Davis LLJ.
In Chartwell Estate Agents Limited v Fergies Properties S A and another [2014] EWCA 506
the Court of Appeal upheld the decision of Mr Justice Globe to grant relief from sanctions in a case where the claimant made an application for permission to serve witness statements out of time and where the application was made weeks after the deadline had expired.
The Judge at first instance had held that the breach was not trivial and nor was there a good reason for it but nevertheless that relief from sanctions should be granted.
The Court of Appeal held that CPR 3.9 applies to witness statements and that the sanction under CPR 32.10 “is to be taken as having effect once the time limit for serving the witness statement has expired”. The suggestion in the White Book that CPR 32.10 does not have effect within the meaning of CPR 3.8 until trial is wrong (Paragraphs 26 and 27).
Here, remarkably, the claimant had deliberately chosen not to serve the statements as it stated that it needed disclosure from the defendant, which was also in default.
The court accepted that there had been no deliberate flouting of the rules but what had happened “was tantamount to reverting to the old, and long exploded, notion of parties setting their own timetable for the conduct of court process”. As rule 3.8(3) itself makes explicit, moreover, the courts’ control cannot in this context be ousted by the parties’ agreement”.
[Note that Parliament has now legislated to allow parties some leeway to vary the court timetable by agreement].
The court suggests that the statements should have been served and then supplemented later if needs be in the light of subsequent disclosure.
If your opponent is not complying with a court order, then serve the witness statements in a sealed envelope.
It is important to remember that if both parties are in default and both sets of statements are thrown out, then it is the claimant who is the real loser as the claim fails. As the court here said:
“It is not, in fact, difficult to deduce that the defendants ultimately never themselves filed their own application for relief just because of the calculation that if Chartwell, as claimant on whom the burden of proof lay, was knocked out from relying on any witness evidence it would not matter to the defendants if they were likewise knocked out. (The calculation also no doubt would have been that if Chartwell obtained relief from sanctions then the defendants inevitably would also). That, when set also in the light of the intervening correspondence, would be a most unattractive result. Overall the judge was, in my view, entitled to attach importance to the fault of the defendants in this regard”.
“9. Given that, and given all the other factors, this was one of those cases in which, notwithstanding the paramount importance and the great weight to be given to the two matters specified in CPR 3.9, those two matters could reasonably be assessed as outweighed by all the other circumstances. There is, in my view, no proper basis for interfering with the judge’s evaluation of the position and his exercise of discretion”.
That is clearly part of the reason why the judge allowed relief and why the Court of Appeal upheld that decision here.
The Court of Appeal also quoted from paragraph 52 of the Mitchell judgment that “this court will not lightly interfere with a case management decision”.
Here, and in Mitchell, the Court of Appeal upheld the original case management decisions, one of which appears to many to be unduly harsh and arguably the one here appears somewhat lenient. It also gives the Court of Appeal the opportunity to distance itself from the widely criticized decision in Mitchell on the basis that its true significance was in upholding the Draconian first instance decision, itself stemming from a Draconian sanction contained in the rules.
That it not wholly convincing as the Court of Appeal overturned what it regarded as unduly lenient first instance decisions to grant relief in
Durrant v Chief Constable of Avon and Somerset Constabulary [2013] EWCA Civ 1624 and
Thevarajah v Riordan [2014] EWCA Civ 15
The Court of Appeal added that
“It is to be emphasised that the courts in considering applications under CPR 3.9 do not have and should not have as their sole objective a display of judicial musculature”.
and
“In the well-known words of Lord Justice Bowen:
“The courts do not exist for the sake of discipline.” “Such sentiments have not been entirely ousted by CPR 3.9, as to be interpreted and applied in the light of Mitchell”.
Lord Justice Laws sole contribution to the decision was:
“66. I agree that this appeal should be dismissed but I have found this case more finely balanced than my Lords. I think it important to emphasise that the result (driven of course by the particular facts) is an unusual one”.
Some believe that Lord Justice Laws wished to give a dissenting judgment but that this might have added chaos to chaos.
The trial judge said it was arguable that CPR 3.9 did not apply as until the trial started the sanction in CPR 32.10 did not take effect; in those circumstances relief from sanctions would not be required and the court would simply apply the overriding objective in deciding whether to extend time. The alternative view is that the sanction took effect from the date when the witness statements were due to be served.
Interpreting CPR 32.10 is not easy – see the judge’s comments in Lloyd above; in Meehan v Manleyand Churchill Insurance Company Limited – High Court, Queen’s Bench Division, 29 January 2014 – unreported, Master Lesley said:
“Although I am not entirely sure what the sanction is under CPR 32.10 as to whether or not it is the case that no reliance on the statements can be had at all, or whether it is simply oral evidence”.
There is a clear difference between CPR 32.10 and CPR 35.13 which deals with expert evidence:
“Consequences of failure to disclose expert’s report 35.13
A party who fails to disclose an expert’s report may not use the report at the trial or call the expert to give evidence orally unless the court gives permission”.
This difference has led to the suggestion that non-expert witness statements can still be used at trial as this is not specifically prohibited as it is in CPR 35.13 in relation to expert evidence.
Here, in allowing relief from sanctions the court observed:
- the trial window could still be maintained;
- both parties were at fault;
- refusing relief would effectively end the claim and that was too severe a consequence and would be unjust;
- the court would not increase the budget as any extra costs were as a direct result of the parties’ default.
The facts giving rise to the application were that the claimant had made repeated requests for full disclosure and had threatened to make an application for specific disclosure and stated that full disclosure was needed in order to draft the witness statements.
The claimant then informed the defendant that the witness statements could not be served in accordance with the court order; the defendant then disclosed the documents but refused to agree to an extension of time for service of the witness statements and several weeks after the date in the court order the claimant applied for permission to serve the witness statements out of time.
On the very same day as the Court of Appeal handed down its judgment in Chartwell, Mr Justice Leggatt reached a diametrically opposite conclusion, holding that the sanction took effect later and did not bite at the time when exchange was due.
That case was
Liberty Place (Sheepcote Street) Management Company Ltd v Paul Davies (3BM01686)
where the court overturned a decision of Birmingham County Court, holding that there was nothing wrong with the original judge’s analysis of CPR 3.9 and Mitchell, but that CPR 3.9 simply did not apply.
With thanks to Paul Marshall of No 5 Chambers who represented the successful applicant in this matter.
DISCLOSURE
In Global Marine Drillships Limited v William La Bella [2014] EWHC 1230 (Ch)
the Chancery Division of the High Court considered whether full and adequate disclosure had been given. In a post-Mitchell world these points are obviously being taken more often and with greater vigour as the prize may be having the opponent’s case struck out.
Here the claimant failed to meet a deadline resulting in an “unless” order which was complied with but the claimant’s disclosure contained privileged documents, resulting in the defendant stopping its review of the documents and applying to have the claim struck out for non-compliance.
The judge held that the claimant had not breached the unless order and therefore the claim should not be struck out.
“In complicated litigation conducted under time pressure, errors can be made about privilege. I think that is a separate issue from the issue of compliance with the unless order and I do not find that the unfortunate ineptitude in including privileged documents in the wrong part of the list is such as to amount to a breach of an unless order”.
There was also an allegation that an insignificant two line email had been omitted from the disclosure but the judge gave short shrift to the suggestion that that constituted a breach. Accidental omissions of a minor nature will not generally give rise to an inference of non-disclosure.
_________
In Medical Supplies and Services Ltd v Acies and Gosling [2014] EWHC 1032 (QB)
the Queen’s Bench Division of the High Court refused the claimant’s application for relief from sanctions for failure to comply with a peremptory unless order for disclosure.
In Marcan Shipping v Kefalas [2007] 1 WLR 1864
the Court of Appeal had held that in accordance with CPR 3 the sanction in an “unless” order took effect without the need for any further order if there was a failure to comply.
Thus an application for relief from sanctions is necessary. Here the court followed the Mitchell decision recognizing that “this may seem harsh as the claimant will now be denied a trial”.
The court also pointed out that although the breach here pre-dated the Mitchell decision parties should have been aware from the Marcan decision of 2007 of the consequences of failing to comply with an “unless” order.
In McTear v Englehard [2014] EWHC 722 (Ch)
the Chancery Division of the High Court refused relief from sanctions in relation to late service of a supplemental list of documents but did not strike out the defence, leaving the defendant, effectively to put the claimant to proof at trial.
In Dinsdale Moorland Services Ltd v Evans and others [2014] EWHC 2 (Ch)
the claimant applied to have the defence struck out on the ground that the defendant had failed to comply with an unless order made in relation to disclosure.
The judge found that the claimant had escalated its complaints around the time that judgment was due in Mitchell and that these tactics had wasted costs and delayed the trial timetable.
He therefore refused the application.
The judge refers to a delay of 24 days after the due date for giving standard disclosure as a “slight slippage” (Paragraph 103). There was then a dispute about the extent of disclosure and inspection and at the case management hearing on 20 June 2013 the District Judge made an unless order in the following terms:
“Unless the 1st, 2nd and 5th defendants five standard disclosure by list in accordance with CPR 31 by 4pm on 1 July 2013 they will be debarred from defending the claims against them as their defence will be struck out”.
Disclosure was give on 1 July 2013 and there was a dispute as to whether the unless order had been breached, that is whether the disclosure was sufficient.
Here the judge under the heading “Relief from Sanctions” considered and quoted from Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537 and
Durrant v Chief Constable of Avon [2013] EWCA Civ 1624.
However the judge then considered two authorities in relation to unless orders concerning disclosure:
Realkredit Danmark v York Montagu [1998] WL 104421, Court of Appeal
and
Re Atrium [2013] EWHC 2883
At paragraph 146 he said:
“I propose to follow the approach of the Court of Appeal in Realkredit”.
That involved not finding that the defective list of documents was illusory and finding that it was not served lacking good faith and was not obviously defective.
The judge concluded that had he found otherwise then “in the light of the recent authorities on relief from sanctions”……”it is most unlikely that I would have been able to grant relief from sanctions”.
In this 24 page, 150 paragraph judgment, the judge has worked hard and successfully to avoid the need to follow Mitchell.
Many judges are doing likewise.
COURT TIMETABLES
It is clear from Lloyd that CPR 3.8(3) overrides CPR 2.11. Thus wherever there is a specific sanction the parties cannot consent to vary the court timetable, and indeed that is what CPR 3.8(3) clearly states:
“Where a rule, practice direction or court order –
(a) requires a party to do something within a specified time; and
(b) specifies the consequences of failure to comply;
the time for doing the act in question may not be extended by agreement between the parties.
Examples of matters where consent is of no effect
Witness Statements
CPR 32.10
“If a witness statement or a witness summary for use at trial is not served in respect of an intended witness within the time specified by the court, then the witness may not be called to give oral evidence unless the court gives permission”.
– See Lloyd v PPC International Limited [2014] EWHC 41 (QB)
Disclosure
CPR 31.21
“A party may not rely on any document which he fails to disclose or in respect of which he fails to permit inspection unless the court gives permission”.
Expert Evidence
CPR 35.13
“A party who fails to disclose an expert’s report may not use the report at the trial or call the expert to give evidence orally unless the court gives permission”.
This provision contains no time limit, but in
Dass v Dass [2013] All ER (D) 100 (Jul)
the court held that a party who did not file expert evidence in the timescale ordered by the court was disbarred from using that evidence unless the court gave permission and that meant that it was a relief from sanctions application and CPR 3.9 applied.
See also Boyle v Commissioner of Police for the Metropolis [2013] EWCA Civ 1477
Practice Direction 29PD 6.5 states:
“6.5 Where the parties agree about changes they wish made to the directions given:
(1) If rule 2.11 (variation by agreement of a date set by the court for doing any act other than those stated in the note to that rule) or rule 31.5, 31.10(8) or 31.13 (agreements about disclosure) applies the parties need not file the written agreement.
(2) (a) In any other case the parties must apply for an order by consent.
(b) The parties must file a draft of the order sought and an agreed statement of the reason why the variation is sought.
(c) The court may make an order in the agreed terms or in other terms without a hearing, but it may direct that a hearing is to be listed”.
CPR 2.11 reads:
“Unless these Rules or a practice direction provide otherwise or the court orders otherwise, the time specified by a rule or by the court for a person to do any act may be varied by the written agreement of the parties.
(Rule 3.8 (sanctions have effect unless defaulting party obtains relief), 28.4 (variation of case management timetable – fast track) and 29.5 (variation of case management timetable – multi-track), provide for time limits that cannot be varied by agreement between the parties)”.
EXPERT EVIDENCE
In Clarke v Barclays Bank [2014] EWHC 505 (Ch) (27 February 2014)
the claimant’s expert valuer withdrew from the case as he was retiring and the claimant’s solicitors withheld this information from the other side for six months until a new expert was found.
On 20 January 2014 an application to reply on the new evidence was allowed by the Deputy Master; the defendant then appealed.
Here the judge found that “it was wholly improper” for the claimant’s solicitor to have withheld the information about the expert. There had been significant prejudice to the defendant in that:
- the defendant’s expert had responded to the claimant’s report;
- the claimant had the advantage of seeing the defendant’s reports and preparing his new report in the light thereof;
- the defendant had to respond again, to a wholly new report;
- the trial would have to be adjourned.
The judge allowed the appeal and refused admission of the new evidence, holding that the claimant’s conduct was “a serious abuse of the court’s process”.
The case was not struck out. The claimant was given permission to rely upon the original report at trial without the expert witness being present.
The judge also referred to the decision in Mitchell and the need for prompt action following the discovery of the expert’s retirement and suggested that had this happened relief would have been granted.
Comment
This is a correct decision and would have been made pre-Jackson-Mitchell. It is important to differentiate between minor and innocent mistakes and serious abuse.
Unfortunately the Mitchell decision does not do so, and may have the effect of encouraging a “might as well be hanged for a sheep as for a lamb” mindset among lawyers.
Matters that cannot be consented to
Summary
- CPR 3.8 – sanctions have effect unless the defaulting party obtains relief from the court.
- CPR 28.4 – varying the fast-track directions.
- Certain case management timetable dates on the fast track and multi-track.
Fast track variations
Certain key dates cannot be varied by agreement. CPR 28.4 reads:
“(1) A party must apply to the court if he wishes to vary the date which the court has fixed for –
(a) the return of a pre-trial checklist under 28.5;
(b) the trial; or
(c) the trial period.
(2) Any date set by the court or these Rules for doing any act may not be varied by the parties if the variation would make it necessary to vary any of the dates mentioned in paragraph (1).
(Rule 2.11 allows the parties to vary a date by written agreement except where the rules provide otherwise or the court orders otherwise)”.
Multi-track variations
CPR 29.5 reads:
“(1) A party must apply to the court if he wishes to vary the date which the court has fixed for –
(a) a case management conference;
(b) a pre-trial review;
(c) the return of a pre-trial checklist under 29.6;
(d) the trial; or
(e) the trial period.
(2) Any date set by the court or these Rules for doing any act may not be varied by the parties if the variation would make it necessary to vary any of the dates mentioned in paragraph (1).
(Rule 2.11 allows the parties to vary a date by written agreement except where the rules provide otherwise or the court orders otherwise)”.
There is a further problem. The standard preface to the directions reads:
“Warning: you must comply with the terms imposed upon you by this order otherwise your case is liable to be struck out or some other sanction imposed. If you cannot comply you are expected to make formal application to the court before any deadline imposed upon you expires”.
This has always been regarded as a warning and encouragement rather than a specific order, but who knows in the current frenzied climate? Clearly it would be possible for a Jackson court to hold that that is the court ordering otherwise.
Gordon Exall in his excellent blog http://civillitigationbrief.wordpress.com/author/gexall/ has suggested that the following be specifically incorporated into a directions order.
“The parties can agree to vary directions in the timetable pursuant to CPR 2.1. However the parties’ attention is drawn to the provisions of CPR 28.4 [or 29.5].
Given the current mood of the courts it cannot be assumed that anything at all can be agreed by consent once litigation has commenced.
In writing
Any CPR 2.11 variation can only be “by the written agreement of the parties”, that is in writing; writing includes emails. The fact that an oral agreement had been reached between the parties does not stop one party challenging the agreement on the basis that it is not in writing, that is the doctrine of estoppel cannot apply.
In Thomas v The Home Office [2006] EWCA Civ 1355
the parties agreed an extension of time for service of the claim form, but the District Judge struck out the claim on the basis that the parties could not extend time for service. The Court of Appeal held that the parties could extend time for service but that the agreement had to be in writing and here it was not and so the claim remained struck out.
Clarity
In Thomas the Court of Appeal said that there was a need for total clarity in agreements. Here the claimant sought a one month extension. The claimant thought that this was for a further month over and above the four month period for service; the defendant believed that it was one month from the date of the conversation. The District Judge preferred the defendant’s account which would have meant that service was out of time in any event.
Jackson L J said:
“First it is always desirable that agreements between solicitors be reduced to writing and – given the ease of communication by email – these days, hardly a burden. Second when agreements (or court orders) about the date by which a thing is to be done are made, it is always better to specify that date precisely rather than by reference to a period such as a week or a month. There is always room for misunderstandings or accidentally fixing a weekend or Bank Holiday if time periods are used. Old heads wisely use.
“On or before the [ ] day of [ ]”.
Lord Justice Neuberger, then in the Court of Appeal and now President of the Supreme Court, set out what is required by CPR 2.11.
“1. It is accepted on behalf of the claimant that the requirements of r.2.11 that there be “a written agreement between the parties” means that there must be some written document. However, there was a sharp division between the parties as to what type of document or documents would satisfy that requirement.
2. Before deciding that point, it is, however, necessary to consider an anterior point made on behalf of the claimant, namely that once there has been one variation which is a “written agreement”, any subsequent variation will be valid even if made orally. This argument, as reformulated by Lloyd LJ in argument, is that r.2.11 is concerned with stipulating that a variation to the time limit in r.7.5 must be in writing, but that any subsequent variation, being a variation to the time limit agreed in the written variation, is not a variation of the time limit “specified by a rule”.
3. Ingenious though that argument is, it must be rejected, in my view. First, as a matter of principle, it seems to me little short of ridiculous to conclude that r.2.11 requires the first variation to be in a “written agreement”, but permits any further variation to be oral, or even to arise implicitly in some way. Secondly, ignoring r7.6 for the moment, it seems to me that where a claim form is served outside the time limit specified in r.7.5, the court could only hold that the claim form had been validly served if satisfied that there had been a variation (or series of variations) of the time limit, and such variation or variations would all have to satisfy r.2.11. Thirdly, as pointed out by Jacob LJ, the logic of the claimant’s argument in this connection is that, once there has been one written variation, there could be no further variations, because there would, on this argument, be no express right to vary the initial variation, and the natural effect of the rules I have been discussing is that the only variations (whether by the court or by the parties) to the time limits contained in r.7.5 are those permitted expressly in the CPR.
4. That brings me, then, to the question of what constitutes a “written agreement of the parties”. Clearly, it would encompass a single document signed by both parties. However, contrary to Mr Serr’s submissions, I see no grounds, either in principle or as a matter of language, for limiting it to a single document. I can see no reason why an exchange of letters between the two solicitors concerned, in which the extension of time is agreed, would not constitute a “written agreement”.
5. An oral agreement which is then confirmed in writing by both sides appears to me also to be within the concept of a “written agreement”. The oral agreement itself would not, of course, be capable of being a written agreement. However, it seems to me that where following the oral agreement, the two solicitors exchange letters confirming what they have agreed, the exchange of letters amounts to an agreement in writing that they have agreed (albeit orally) an extension of time: to my mind, it would, at best, be no more than a quibble to contend that an agreement in writhing that the parties have agreed something orally does not constitute a “written agreement of the parties”. If the oral agreement, because of the very fact that it was oral, could not validly effect a variation, then it seems to me that there is no reason why it cannot be said that the time limit has been “varied by the written agreement of the parties” even though that written agreement was an agreement between the parties that they had orally agreed the variation.
6. s solicitors in connection with a different matter, namely the expert evidence, and enclosed a letter to the expert in which the solicitor stated that an extension to 1 April 2005 had been agreed.
7. With some hesitation, I have reached the conclusion that this was simply insufficient to amount to a “written agreement” as contemplated by r.2.11. First, it seems to me to involve an impermissible stretching of the expression to cover the contents of a letter, whose purpose had nothing whatsoever to do with agreeing, but was merely communicating to a third party what had been orally agreed. Secondly, it appears to me undesirable that the question of whether or not there has been a valid agreement should turn on what a solicitor happens to write in subsequent correspondence which was not intended to bear on the question of agreement at all. To my mind, the concept of a “written agreement between the parties”, particularly in the context of the CPR, involves a document or exchange of documents which is intended to constitute the agreement or to confirm or record the agreement. Because one cannot envisage every possibility which might eventuate, I would not want this to be seen as being entirely prescriptive.
8. Having said that, it seems to me clear that an oral agreement between two solicitors, subsequently recorded in a letter sent by one solicitor to the other but not replied to by the other, cannot possibly be said to constitute a “written agreement of the parties”. Similarly, an oral agreement between two solicitors, evidenced by an internal confirmatory note by one solicitor, or even by each of the solicitors, cannot constitute a written agreement, unless, of course, the internal notes are exchanged (or, for instance, one solicitor sends its internal note to the other, and the other in some way confirms in writing its relevant contents).”
Gordon Exall http://civillitigationbrief.wordpress.com/author/gexall/ suggests that a provision be put in the actual case management order permitting the parties to agree 14 day extensions without an application. One Queen’s Bench Master has already allowed this.
This seems to me to be entirely sensible, practical advice. As every rule and Practice Direction etc says something like “unless the court orders otherwise” you are safe as the court has indeed ordered otherwise.
TRIBUNALS
In RP Baker (Oxford) Ltd. V. Commissioners for HMRC [2014] UKFTT 420
the First Tier Chamber Tax Tribunal allowed HMRC’s schedule of costs to be admitted even though it was three days late.
“…. if the sanction for failure to meet a deadline is always that a party is deprived of the opportunity to make (or defend) its case, then justice cannot be served. Each case must be considered individually”
“… weighing all factors in the balance, and giving appropriate weight to the factors mentioned in CPR 3.9, I waive the time limit in Rule 10(3) and therefore find that the application and schedule must be treated as if they had been filed in accordance with the rules.”
The factors that the Judge took into account were:
(a) it was only three days late;
(b) only part of the application, the schedule, was late;
(c) it was an inadvertent error;
(d) no prejudice was caused to the other party;
(e) the opposite decision might allow the other party to escape a sanction – payment of costs- for its own unreasonable behaviour.
In Archer v HMRC [2014] UKFTT 423 CTC
the First Tier Chamber Tax Tribunal refused to allow a late appeal by a taxpayer and said that it would have made the same decision pre Mitchell, and under the old CPR 3.9 but observed:
“….the Tribunal should continue to balance all relevant factors in order to meet the overriding objective but with greater weight given to the need to comply with rules and regulations, including time limits contained within the statute, than was the case before new CPR 3.9 was introduced.”
In Compass Contract Services UK Ltd v HMRC [2014] UKFTT 403(TC)
The First Tier Chamber rejected HMRC’s application to lift an order barring item from taking any further part in the appeal after late service of a statement of case in breach of an unless order.
The Tribunal rejected any notion that public law cases should be treated any differently from private law cases.
In HMRC v McCarthy and Stone and another [PTA/345.2013]
the Upper Tribunal, Tax and Chancery Chamber refused HMRC’s application for an extension of time to serve a notice of appeal.
The judge held that although the Civil Procedure Rules do not apply to tribunals and although the overriding objective in the Upper Tribunal’s rules is not the same as the CPR1 overriding objective, there was no reason to adopt a more relaxed approach to compliance with rules, directions and orders.
Mitchell applies in full to tribunals. Indeed the judge here said that pre-Jackson he would have allowed the application (Paragraph 57).
In a chilling echo of Mitchell the judge said:
“……..the issue to be considered is not the interests of justice generally or even in relation to the parties but the interests of the administration of justice”. (Paragraph 56).
The judge seems wholly unaware of the absurdity of that remark. If the interests of justice generally and justice between the parties are irrelevant then it is not justice which is being administered, but rather rank injustice.
In any event the decision is wrong and it does not follow
or has Jackson abolished the precedent system as well as Parliament?
The decision in McCarthy was followed in Mr and Mrs B v Revenue and Customs, March 2014 in a case about whether permission to appeal to the Upper Tribunal out of time should be granted. The tax tribunal recognized that the issue of leave to appeal out of time was different from a breach of the tribunal rules but held that Mitchell applied.
INSOLVENCY
In Contrarian Funds LLC v. Lomas and Others [2014] EWHC 1687 (Ch)
The Chancery Division of the High Court held that the Mitchell principles applied to the Insolvency Rules and litigation brought under the Insolvency Act 1986.
Here, on the facts, an application for a further extension of time to apply to the court to challenge the administrator’s decision to reject a proof of debt was rejected.
The significance of the case is that it is yet another example of Mitchell applying outside the Civil Procedure Rules.
GROUP LITIGATION
In Holloway v Transport Medical Group [2014] EWHC 1641 (QB)
the Queen’s Bench Divison of the High Court held that Mitchell applied to Group Litigation Orders (GLO).
An order in group litigation provided for 8 April 2013 to be the cut-off date for lodging applications. In January and February 2014 seventeen applicants sought to join the action and argued that they were not seeking relief from sanctions as they were never part of the Group Litigation Order and thus had not disobeyed any order, meaning that CPR 3.9 did not apply.
The court held that CPR 3.9 applied and that the purpose of a GLO was to secure good management of the claims.
Refusing relief from sanctions the court held that its failure was “serious and sustained” The claimants’ solicitors had failed to have the claims joined to the register on time and had failed to make an in-time application for an extension before the cut-off date and indeed made no such application until 10 months after the cut-off date.
COSTS BUDGETING
The key case is of course Mitchell itself, that is Mitchell v News Group Newspapers Limited [2013] EWCA Civ 1537.
See above in the General Principles section – “Grim Day for Justice: Mitchell Considered”.
In Lotus Cars Limited v Mecanica Solutions Inc [2014] EWHC 76 (QB) Case no HQ13X02200
Master Kay rejected a Mitchell claim in a case where the claimant filed one costs budget covering all three cases which had been joined but where there were different defendants and the cases had not been consolidated.
Shortly before the CMC two of the claims were compromised and the claimant filed a revised costs budget in relation to the remaining action but the defendant refused to agree it as it covered all three cases.
Thus Master Kay had to consider whether the claimant had failed to file a costs budget and if so whether relief from sanctions should be granted.
Master Kay held that the claimant had complied with the order:
“17. A significant purpose of cost budgeting is to ensure that the cases are handled as economically as possible and it seems logical that if cases are to be managed and tried together a single cost budgeting exercise should be sufficient. The provision of three separate budgets merely adds to the costs. If the other two claims had not been settled the single budget approach would have proved effective and it may well be that the Defendant’s multi budget approach might have been open to criticism. In my view the Claimant’s approach was not unreasonable”.
Consequently there was no need to consider the issue of relief from sanctions, but had it been necessary so to do the Master would have granted it, for the reasons set out in Paragraph 21 of the judgment:
“21. a. The failure to comply with the rules as found by Master McCloud in Mitchell was much more serious and, in my view, that decision is distinguishable from the present case where the Claimant was trying to comply with the Orders made;
b. The dicta of Coulson J. in Stella Willis v J Rundell & Associates Ltd [2013] EWHC 2923 indicates that the court should be cautious about penalising a party in respect of non-compliance with the cost budgeting rules;
c. I have had the opportunity to read the decision of the Court of Appeal in Mitchell [2013] EWCA Civ 1537 given on the 27th November 2013 in which it was considered that the first task is to consider whether the non-compliance is trivial, and it if is not, then to consider whether there is a good reason for the default. If there is then the court is likely to grant relief. Applying those tests it seems to me that the default, if default it was, should be considered as trivial and even if it was not there was an understandable reason for the default which did not arise from the solicitor’s failure to act promptly or dereliction of duty.
d. Although the decision in Mitchell indicates that a more robust approach should be taken with applications for sanction from penalty it does not provide that a party should be penalised where the balance of justice and fairness would indicate that a contrary approach is appropriate. In my view, the reality of this case was that the Claimant was trying to comply with an aspect of the Orders and the rules which were not entirely clear and if, with hindsight, it is found that it failed to do so properly I think that it would be contrary to the overriding principle to apply the penalty required by the Defendant.
In Burt v Linford Christie, Birmingham District Registry, 10 February 2014, unreported
District judge Lumb refused relief from sanctions where the defendant filed the costs budget one day late, that is six days, not seven days, before the Costs and Claims Management Conference. CPR 3.14 therefore applies and the defendant is treated as having filed a budget comprising only the applicable court fees.
This claim is a personal injury case where liability had been admitted and the pre-allocation notice gave dates for filing the directions questionnaire and other steps. The claimant filed a Precedent H costs budget but the defendant did not.
CPR 3.13 states:
“Unless the court otherwise orders, all parties except litigants in person must file and exchange budgets as required by the rules or as the Court otherwise directs. Each party must do so by the date specified in the notice served under rule 26.3(1) or, if no such date is specified, seven days before the first case management conference”.
CPR 3.14 provides:
“Unless the court otherwise orders, any party which fails to file a budget despite being required to do so will be treated as having filed a budget comprising only the applicable court fees”.
On the facts of this case the District Judge held that there was no breach of CPR 3.13 occasioned by the failure of the defendant to file a costs budget with the Directions Questionnaire.
There was a clear breach of CPR 3.13 in that the defendant’s budget was filed six, not seven, days before the first case management conference.
Here the court held that that was not a trivial breach and thus imposed the full CPR 3.14 sanction, that is that the defaulting party, here the defendant but in Mitchell the claimant, stands to recover only court fees, even if wholly successful and indeed even if the other party’s case is totally unmeritorious and conducted in an appalling fashion.
In Aliasghas Porbanderwalla v Daybridge Ltd, 30 January 2014, Birmingham County Court
HHJ Worster allowed an appeal against an order limiting both parties to court fees only when they had apparently failed to file budgets, having been misled by Court Form N149C.
Here the claimant issued the Claim Form on 18 April 2013 and on 28 May 2013 Form N N149C – Notice of Proposed Allocation to the Multi-Track – was sent to the parties and provided:
“It appears that this case is suitable for allocation to the multi-track. If you believe that this track is not the appropriate track for the claim you must complete box D2 on the Directions Questionnaire (Form 181) and explain why.
You must by 28 June 2013
a) complete the Directions Questionnaire (Form 181) and file it with the court office………and serve copies on all other parties; and
b) attempt to agree directions with the other parties; and
c) file proposed directions in accordance with CPR 29.1(2) (whether or not agreed) with the Directions Questionnaire. By the same date the allocation fee of £220 is due”.
Thus no reference was made to any costs budget and both parties sent the Directions Questionnaires to the court and Section H of that document states “If your clam is likely to be allocated to the multi-track form Precedent H must be filed in accordance with CPR 3.13”.
The claimant told the court that it was not enclosing Precedent Form H and that it would be filed as and when directed by the court in advance of the Case and Costs Management Hearing.
The District Judge confined both parties to court fees for failure to file budgets.
On appeal the claimant’s argument that CPR 3.12 only applied to cases actually allocated was rejected; budgets had to be filed seven days before the first case management conference and that will always be before allocation – see CPR 3.13.
However the Judge accepted the claimant’s argument that as no date was specified in the CPR 26.3(1) notice for the filing of budgets, and as there was no case management conference, the requirement for the filing of budgets pursuant to CPR 3.13 was never triggered.
The Judge said:
“11. But the words of the second sentence of rule 3.13 do not actually say that the parties must file and exchange budgets by the date specified in the notice for the filing of budgets; simply that they must do so by the date specified in the notice served under rule 26.3(1). So the rule can be read as requiring a budget to be filed and served by the date specified in the notice – here 28 June 2013, even though that is a date by which other specified matters are to be complied with. That must be how the District Judge understood the rule. He is in good company.
12. The claimant drew my attention to two matters. Firstly the use of the word specified after date in the second sentence of rule 3.13. Secondly, that rule 26.3(b)(i) requires that the notice of proposed allocation will specify any matter to be complied with by the date specified in the notice. The link between these two rules is plain, and they should be read together.
13. The principal point of construction which has persuaded me is as follows. The notice envisaged by rule 3.13 is a notice which will specify any matter to be complied with by the date specified in the notice. Those words are apt to include the requirement for the exchange and filing of a costs budget. Rule 3.13 adopts the date in the notice as a trigger in that context – in other words on the basis that the notice will specify when that matter is to be complied with. I construe rule 3.13 as referring to a rule 26.3(1) notice which specified a date by which the costs budget was to be filed.
14. Further, the second sentence rule 3.13 is to be read with the first sentence. The words must do so refer back to the requirement to exchange and file budgets in the first sentence. The words by the date specified in the notice can also be read in the context of a requirement to exchange and file budgets. It is by no means clear, but does the rule really meant that there is a requirement to file a budget by the date specified in the notice for doing something different – here the filing of Directions Questionnaire and the like? It makes more sense to refer (back) to a requirement to exchange and file a budget, than to a requirement to do something else.
15. I also have in mind that the failure to comply with the requirement of rule 3.13 is the potentially serious sanction provided for by 3.14. The more serious the sanction, generally the greater the need for clarity. Whilst it is not the determinative point in my decision, and would give way to positive arguments of construction, a genuine ambiguity in the rules ought to be resolved in favour of the defaulter.
16. Whilst I can see that the words of rule 3.13 can be read in a way which justifies the order appealed against without doing any particular violence to the language used, the more natural reading of the rule is that contended for by the Claimant. Absent a requirement for the exchange and filing of a budget in the rule 26.3(1) notice or a CMC, the requirement is not triggered. The appeal is allowed on that ground. Paragraph 1 of the order of 3 October 2013 is set aside, and I make the orders sought as to the exchange and filing of budgets and for the case to be lists for a Costs Management hearing.
The Judge went on to say that even if he had found otherwise he would have granted relief from sanctions:
“…….this was not a case where the parties were refusing to engage with the requirements for cost budgeting. Their approach to the requirements of the rule was understandable, they had otherwise complied with all the orders and directions of the Court, the Claimant had indicated that it would file a budget as and when directed to in the covering letter I refer to, and the appeal was brought promptly. The default would not have been a trivial one, but there was a good reason for it”.
The Form N149C sent out here differed from the one on the Court Service website in that it did not include the requirement for the filing of a budget. This is a common problem and is a very understandable state of affairs, especially at a time when the legal profession and the courts are trying to work out the effects of these new rules.
Lawyers are advised always to file Form H in advance as this County Court case is not a binding precedent.
Check that the Form N149C sent out by the court is the correct one; the current correct one is on the Court Services website.
In Rattan v UBS AG, London Branch[2014] EWHC 665 (Comm)
Mr Justice Males rejected a claimant’s argument that the defendant had provided its costs budget six, not seven, clear days before the CMC, even though both parties had agreed the appropriate date as 28 February 2014.
The claimant tried to argue that there was a difference between “on 28 February 2014” and “by 28 February 2014”.
The judge rejected that contention and said that had he needed to grant relief from sanctions he would have done so.
The significance of the decision is in the Judge’s comments about this attempt to Mitchell the defendant:
“completely without merit”
“futile and time wasting”
“manifest nonsense”
“misguided piece of opportunism”
Not bad in a two page judgment. The Judge ordered the claimant to pay the defendant’s costs on an indemnity basis.
Indemnity Costs and Part 36
Costs budgeting does not deal with indemnity costs, in the sense that the budgets do not contain indemnity costs figures.
Thus a claimant who matches his or her own Part 36 offer may get a figure well in excess of the amount in the budget.
This raises the issue of whether a Mitchell/Christie party, whose budget by CPR diktat consists only of court fees, may recover costs if they are awarded on an indemnity basis.
I think not. Generally a party will not get costs in excess of its budget. The budget is not just about money, it is about time. Thus an indemnity costs order will allow a party to get more per hour than in the budget, but will not be able to recover for more hours work than in the budget. In a Mitchell/Christie situation there is no budget save for court fees, so there are no hours and thus the court will not allow for any work.
Consequently an indemnity costs order makes no difference.
This has the effect of neutering Part 36 where costs have been ruled out by operation of CPR 3.14. This will obviously lead to fewer cases settling and therefore more court time being used up which is presumably not the general idea of the ultra-tough approach.
Indeed where a claimant is subject to a CPR 3.14 penalty in a Qualified One Way Costs Shifting case both parties will proceed in the certainty that they can never recover, nor be responsible for, any costs in relation to the other party.
That is one way of introducing contingency fees I suppose.
Schedule of Costs
In Devon County Council v Celtic Bioenergy Ltd [2014] EWHC 309 TCC
Mr Justice Stuart-Smith granted relief from sanctions when a schedule of costs was served 18 minutes late, saying it was a “substantive irrelevance”.
In Rehill v Rider Holdings [2014] EWCA Civ 42
Both parties had failed to file a costs schedule for this hearing. The Court of Appeal punished the successful defendant by ordering it to pay the costs of any detailed assessment in any event, a markedly more lenient penalty than the Mitchell punishment.
Statement of Truth on Costs Budget
New statement of truth on a costs budget since 22 April 2014:
“This budget is a fair and accurate statement of incurred and estimated costs which it would be reasonable and proportionate for my client to incur in this litigation”.
In The Governor and Company of the Bank of Ireland v Phillip Rank Partnership [2014] EWHC 284 (TCC)
Mr Justice Stuart-Smith rejected an argument that an error in the statement of truth meant that the costs budget was filed late.
The claimant’s Precedent H costs budget had the words “statement of truth” immediately above the signature of his representative and the full wording was not included but a further copy was later served, in identical form, with the full statement of truth included.
17 days later and one day before the CMC the defendant took the point and the claimant applied for relief from sanctions saying that it was an error; the budget had been completed externally and the partner signing the form had failed to notice that the full statement of truth had not been included.
The defendant argued that the claimant was in breach of CPR 3.13 and that there was no reasonable excuse and that statements of truth were important.
The judge dismissed the arguments as having no merit, technical or otherwise and as bringing the rules of procedure and the law generally into disrepute.
The judge concluded that there was no breach of CPR 3.13; the claimant had filed and exchanged a costs budget on time, but the budget suffered an irregularity.
CPR 3.14 provides for a sanction in the event that a party “fails to provide a budget”. It does not include the words:
“complying in all respects with the formal requirements laid down by PD 3E” or any similar words.
As the judge pointed out, any other finding would mean that a budget would be a nullity if, for example, one word was mis-spelled.
Relief from sanctions was not required, but had it been required the judge made it clear that he would have granted it.
Although not trivial, this was a failure of form rather than of substance. The nature of form Precedent H was a trip for the unwary.
“The defendant’s submission is therefore rejected. The claimant did not fail to file and exchange a costs budget on 24 January 2014. It filed and exchanged a budget that was subject to an irregularity that has since been rectified. No question of relief from sanctions arises. If the taking of this issue serves to alert others to the need to change the form of Precedent H from that set out in the supplement, some useful purpose will have been served”.
In Americhem Europe Ltd v Rakem Ltd [2014] EWHC 1881 (TCC) the Technology and Construction Court held that the signing of a costs budget by a costs draftsman did not render it a nullity, even though it was a clear breach of the requirement in the CPR that the budget be signed by a “senior legal representative”.
The judge, Mr Justice Stuart-Smith, said that “to hold that it was not a Costs Budget at all would not, in my judgment, be a proper application of a robust approach: rather, it would lack in any form of reality or justification”.
Consequently there was no need for relief from sanctions, but if there had been then the judge would have granted it, as “the consequences of refusing relief seem to me to be disproportionate, unjust and therefore contrary to the overriding objective”.
The judge ordered the irregularity to be amended and awarded the “innocent” party, who had taken the point, just £50 costs. He went on to say:
“15. While I do not criticise the Third Party for taking the point, I note that this is the second occasion where a mere irregularity in an otherwise compliant Costs Budget has been the occasion before me for an argument that the irregularity renders the Costs Budget a nullity. Similar and analogous arguments have been raised elsewhere: see, for example, Summit Navigation Ltd v Generali Romania Asigurare [2014] EWHC 398 (Com). I respectfully adopt what Leggatt J said at [49] of Summit:
“There remains, of course, the further consideration of the need to enforce compliance with rules, practice directions and court orders which, even on its own, must clearly be given substantial weight. But, as the Master of the Rolls emphasised in his lecture on the Jackson reforms in words approved by the Court of Appeal in Mitchell at [38], it is not the aim of the reforms to turn rules and rule compliance into “trip wires”, nor into “the mistress rather than the handmaid of justice” nor to render compliance “an end in itself”. It seems to me that this would be precisely the result of refusing relief in a situation where, as here, there has been non-compliance with a rule or order but the objective which the insistence on compliance seeks to serve of ensuring that litigation is conducted efficiently and at proportionate cost has not been impaired”.
Choice of Judge
In Bijlani v Unum Limited [2014] EWHC 27 (QB)
Mr Justice Turner dismissed an application by the claimant that her matter be re-listed before a High Court judge.
The only significance is the mention of Mitchell by a judge who seems to be getting more than his fair share of such cases.
“28. Fresh emphasis has, since the introduction of the Jackson reforms, been placed upon the importance of compliance with procedural rules and orders of the court from the perspective not only of the parties but from that of the court itself. Reference can be made generally to the observations made by the Court of Appeal in Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537”.
However Mr Justice Turner made it clear that “even if the matter had fallen to be determined under the older and more indulgent procedural regime I would have come to the same conclusion”.
Telephone Hearings
In Jones v Wealth Management (UK) Ltd [2014] Ch D
Mr Justice Arnold allowed an appeal against the first instance judge’s decision to strike out the claim as a result of the claimant’s failure to arrange or attend a telephone conference.
The judge adjourned a case management conference and ordered that the new hearing be by way of a telephone conference to be arranged by the claimant after receiving a notice of hearing.
The court sent out a notice but it did not mention the parties’ name or the claim and consequently the claimant failed to arrange the hearing; the judge struck out the claim and refused relief from sanctions.
The High Court held that the decision was unfair; the exercise of discretion was flawed. The judge had failed to consider the claimant’s explanation for non-attendance at the telephone conference and had failed to consider the interests of the administration of justice.
LOSS OF LEGAL REPRESENTATION
Newland v Toba Trading FZC [2014] EWHC 210
involves a very complicated procedural history, but the key findings of Mr Justice Hamblen are:
- loss of legal representation shortly before the deadline does not constitute a Mitchell “good reason” for the purposes of an application for relief from sanctions;
- the considerations under the old CPR 3.9 are now generally irrelevant; only the two matters in the new CPR 3.9 should normally be considered;
- even if two actions are being tried together, a breach in one action does not necessarily impact on the other action;
- it is important not to confuse CPR 3.9 applications for relief from sanctions with appeals. Applications under CPR 3.7(1) to vary an order are only appropriate in cases involving clear mis-statement which is central to the decision made. It is not appropriate in cases involving questions as to why and how the judge may have ended up with the wrong impression of the case; in such cases an appeal is more appropriate.
CPR 3.1(7) reads:
“A power of the court under these Rules to make an order includes a power to vary or revoke the order”.
The Mitchell decision deals with CPR 3.1(7) applications by reference to the Court of Appeal decision in:
Tibbles v SIG plc [2012] EWCA Civ 518.
These are known as the Tibbles criteria. The case is not to be confused with Lord Justice Jackson’s cat of the same name who is believed to have had a major influence on his report.
UNLESS ORDERS
In Wahid and Shadkam v Skanska UK plc and Riverstone Insurance [2014] EWHC 251 (QB)
the claimants failed to comply with a court order to disclose a list of all road traffic accidents that they had been involved in and copies of medical reports arising from those accidents and mandates for the release of their clinical records.
An unless order was made expiring 3 January 2013. Certain documents, but not the clinical mandates, were supplied on 27 December 2012.
On 9 April 2013 the court made an order that as at 4.00pm on 3 January 2013 the statements of case of both claimants stood struck out.
The claimants applied for that order to be set aside and in the alternative for relief from sanctions, both of which applications were refused.
The claimants appealed but the appeal was rejected. The court stated that the 9 April 2013 order merely declared what the position was on 3 January 2013 when the time for complying with the unless order expired.
Application should have been made in relation to the unless order and thus the claimants were three months late, or four months late in relation to the original unless order, made on 11 December 2012.
If a direction cannot be complied with, then an application to set aside or vary that order should be made in advance of the deadline contained in that order.
Jurisdiction
In S.E.T. Select Energy GMBH v F & M Bunkering Ltd [2014] EWHC 192 (Comm)
the defendant filed out of time a CPR 11 application contesting jurisdiction resulting in the claimant filing an application for judgment to be entered in its favour.
This case involved Article 27 of the Judgments Regulations.
In The Alexandros T [2013] UKSC 70 the Supreme Court held that the time limit under CPR 11.(4) “can in an appropriate case be extended under CPR 3.1(2)(a)”.
That is what the Commercial Court – Mr Justice Blair – chose to do here, thus rendering unnecessary an application for relief from sanctions under CPR 3.9.
It appears to be a lottery at present as to when and why a party may succeed under CPR 3.1.(2)(a), which gives the court power retrospectively to extend time, and CPR 3.9.
Here there was a clear sanction for failing to get the application in on time and that sanction is that the party is deemed to have accepted jurisdiction.
However the application by the court of CPR 3.1.(2)(a) avoided the need for the defendant to apply for relief from sanctions with the consequent risk of being Mitchelled.
COSTS
In Lakatamia Shipping v Nobu Su [2014] EWHC 796
the High Court granted the defendant relief from sanctions in relation to a trivial breach – the defendant had been 15 minutes late in providing disclosure.
The claimant opposed the application and was ordered to pay the majority of the defendant’s costs. Generally even a successful party seeking relief will pay costs as it is its own breach, and therefore conduct, which has made the application necessary.
The judge’s comments are significant:
“6. The claimant submitted that, in every case where the other party is seeking relief from sanctions, the so-called “innocent” party is entitled to come before the court and to argue that there should be no such relief and that the court should stick to the sanction originally imposed. In my judgment, that is a mistaken approach. The CPR is quite clear that parties should conduct litigation in a reasonable and realistic manner, an approach which is echoed in the Commercial Court Guide – see, for example, A1.4. In this court we expect parties so to conduct themselves. In my judgment, in vigorously opposing this application at a hearing, the claimant failed to do so.
7. I also consider that it is important that the message goes out that when a party applies for relief from sanctions, the other party should not assume that it is going to get a free costs ride in opposing that application. If the court considers that it was unreasonable to do so, then there will be cost consequences, and I consider that that is what should occur in this case. The Mitchell guidance was provided in order to help to avoid endless satellite litigation. If parties consider that they can always come to court to oppose any application for relief, then there will be no end to that satellite litigation.
8. For these reasons, I have reached the conclusion, in the exercise of my discretion, that the defendant should pay the costs of making the application, the costs of the witness statements, including those of Mr Gardener, and a proportion of the costs of the hearing, since it would have had to come to court anyway, but that the bulk of the costs of the hearing should be paid by the claimant”.
APPEALS
In Baho and Others v Meerza [2014] EWCA Civ 669
the Court of Appeal refused an application for extension of time to lodge a notice of appeal seven days late.
The original application had been deficient in that the notice was not signed and the wrong fee had been paid.
Mitchell applied. The delay was not trivial. The lack of prejudice to the respondent was irrelevant, as was the fact that there had been no wasting of court time or resources. There was no good explanation for the seven day delay.
“32. I agree that the application for an extension of time for appealing should be refused. If the claimant had promptly explained the errors made about the fee for filing the notice of appeal and the absence of a signature on the notice of appeal I might have regarded this as a case for an extension. Notwithstanding the approach that should now be taken to such applications following Mitchell and the fact that the application was more than trivially out of time, the mistake about the quantum of the fee required in the unusual case of an appeal for which permission is not necessary might be thought to be venial and it was not pointed out by the court at the time. However, a completely wrong explanation of the failure to lodge an appeal in time was initially given, and what is now said to be the correct explanation was given very late indeed – just over a week before this hearing – and without any explanation of that delay or of the discrepancy from the earlier explanation. Nor is there even now any explanation of the failure to have the notice of appeal signed. In those circumstances I do not think that the appellant is entitled to any indulgence”.
In Harrogate Borough Council v Secretary of State for Communities and Local Government and Zammitt [2014] EWHC 1506 (Admin)
the Administrative Division of the High Court held that two days lateness in serving a notice of appeal against a planning inspector’s decision was trivial, and thus granted relief from sanctions.
The Judge said:
“65. If, contrary to my view, a delay of two days is not to be regarded as trivial I accept that the reason for the delay (a miscalculation of the dates by Mr Power) is not a good reason. I would then have had to consider all of the circumstances of the case. I would have had in mind the principle that relief should not usually be given because the two factors mentioned in rule 3.9 usually trump all other factors. I would, however, still have granted relief. In particular I would have held that the public interest I have identified coupled with the relatively short (albeit non-trivial) delay in service of the claim outweighed the two factors in CPR 3.9 and any minor prejudice Mr Zammitt may have suffered by reason of the two day delay”.
© Reproduced by kind permission of LexisNexis. This material appears in Butterworth’s Personal Injury Litigation Service
Comments on Previous Blogs:
Relief from Sanctions: High Court Declines to Follow Mitchell:
Trevor Swaine: What is your view on the case below, is using the exact template from the white book a significant breach of the rules? What are the prospects of a successful appeal?
A report by Tom Gibson in PI Brief Update makes worrying reading. The headline reads
“ Would a district judge strike out a costs budget because it contained the phrase “[Statement of truth]”, in square brackets, rather than the full statement of truth wording? Yes, in this particular case, so be warned!”
The report can be found at PI Brief update. The full report is behind a paywall. However the summary itself gives cause for concern.
See the report at http://www.pibriefblog.com/2013/12/24/a-costs-budgeting-horror-story-tom-gibson-outer-temple-chambers/
Response: Trevor
I apologize for the long delay in replying and to a certain extent the point you raise has been overtaken by the decision of the Court of Appeal in Denton v (1) T H White Ltd (2) De Laval Ltd and conjoined cases [2014] EWCA Civ 906.
Such a breach would certainly not be regarded as substantial or significant, and indeed even in the pre Denton climate the vast majority of courts would have found that breach trivial and I believe the case was successfully appealed.
It is most important in these cases to read the full judgment. These are now generally obtainable and my advice is not to rely on briefing notes. They may be a useful alert to a case but there is no substitute for reading the full judgment.
Kerry
Is the Supreme Court anti Mitchell-Jackson:
legalorange: If the main insurance companies (which the Mitchell decision largely affects) agreed to indemnify the costs of appealing Mitchell to the Supreme Court, then it would be worthwhile.
Say 5 large insurers at £50k each? I can imagine Counsel would act pro bono, and maybe even some solicitors. It would simply be about having a reserve fund in place to meet the costs of MGN of an unsuccessful appeal.
In a perfect world, solicitors would fund this from a central fund in a similar manner to how the judicial review against QASA was handled by the Criminal Bar Association.
Response: A more radical solution is for the state to fund appeals to the Supreme Court; by definition any appeal to the Supreme Court must involve a point of general pubic importance.
Imagine how much public money would have been saved had the Supreme Court given a definitive ruling on Mitchell and thus avoided thousands of court hearings.
The recent Court of Appeal decision in Denton v (1) T H White Ltd (2) De Laval Limited and conjoined cases [2014] EWCA Civ 906 does not really clarify matters, and so this issue will go on and on.
Kerry
The Revenge of Mr Justice Andrew Smith:
Paul Fulcher: Hi Kerry sorry to bother you.
We have a non litigated matter that settled by way of acceptance of Part 36. Costs could not be agreed so we issued Part 8 but the court have returned the part 8 documents saying we have an order for costs(part 36) therefore they don’t need to make a sealed order and we can formally serve using Part 36?
Is it me or are the court wrong?
Response: Paul
Part 46 of the CPR deals with Costs – Special Cases and rule 46.14 makes it clear that Part 8 proceedings are the correct are the correct way to issue a claim in relation to costs where the matter has settled by way of a Part 36 offer and was non-litigated.
Rule 46.14 is as follows
(1) This rule applies where –
(a) the parties to a dispute have reached an agreement on all issues (including which party is to pay the costs) which is made or confirmed in writing; but
(b) they have failed to agree the amount of those costs; and
(c) no proceedings have been started.
(2) Where this rule applies, the procedure set out in this rule must be followed.
(3) Proceedings under this rule are commenced by issuing a claim form in accordance with Part 8.
(4) The claim form must contain or be accompanied by the agreement or confirmation.
(5) In proceedings to which this rule applies the court may make an order for the payment of costs the amount of which is to be determined by assessment and/or, where appropriate, for the payment of fixed costs.
I agree with you and I believe that the court was incorrect not to issue the Part 8 proceedings.
Kerry
Kerry Underwood 
Thank you for such an excellent résumé
What a mess the courts have produced
DOUG Green
February 25, 2014 at 3:15 pm
Thank you!
Kerry
kerryunderwood
February 25, 2014 at 3:21 pm
A tour de force. Fascinating reading and hugely informative. You should lecture on Civil Procedure at a University !
Root
February 25, 2014 at 3:20 pm
Thank-you! I do do a fair bit of lecturing to solicitors.
Kerry
kerryunderwood
February 25, 2014 at 4:04 pm
“The one great principle of the English law is, to make business for itself”
So true in this case !
Root
February 25, 2014 at 5:46 pm
Except Jackson/Mitchell threatens to put us all out of business!
Kerry
kerryunderwood
February 25, 2014 at 5:59 pm
[…] Kerry Underwood reviews the relief from sanctions cases to date and is, as ever, trenchant in his views. […]
CIVIL PROCEDURE, COSTS & SANCTIONS: LINKS TO RECENT ARTICLES AND POSTS | Civil Litigation Brief
February 25, 2014 at 5:57 pm
Reblogged this on Costsblog and commented:
Kerry Underwood’s masterful, encyclopaedic blog on relief from sanctions – a must read!
Jon Williams
February 25, 2014 at 6:23 pm
Thank-you Jon.
Kerry
kerryunderwood
February 25, 2014 at 6:25 pm
Did you spot that Helen Grant has closed her LLP? Citing “positive changes”!!
Mark Thomas
March 4, 2014 at 7:56 am
Yes I did!
Kerry
kerryunderwood
March 4, 2014 at 3:56 pm
I am a defendant and need some advice on a recent judgement against me refusing relief from sanctions under the CPR 39 whilst my sister was awaiting legal aid certificate transfer.
At the hearing for relief of sanctions, a part 55 possession claim heard immediately after although I was not served a court order about the hearing, our defence and counterclaim was also struck out even though I had proof of disrepair and the claimant breach of the Tenancy Deposits SCHEME X 3, the Claimants are also being investigated by HSE for use of non registered Gas Safe Engineer and non compliance to Gas Safe Installation and Use and the Council have taken an enforcement action for the LL to carry out repairs on a condemned boiler. However, the Judge went on to state that possession would be granted even though the claimant’s couldn’t prove rental arrears.
I need help the claimant’s are wealthy and justice is not being fairly served.
Samantha Garcia
September 15, 2015 at 1:12 am
I can be contacted on 01442 430900 or kerry.underwood@lawabroad.co.uk and will be able to quote you a fee for initial consideration of the papers and advice.
Kerry Underwood
kerryunderwood
September 15, 2015 at 11:51 am